While the U.S. Treasury’s Bureau of Engraving and Printing (BEP) physically prints currency, the term “printing money” figuratively refers to the Federal Reserve’s ability to create and destroy money. The Fed creates money electronically by expanding its balance sheet. To do so, it purchases bonds from member banks through open market operations (FOMC), simultaneously creating a liability in the form of bank reserves and an asset in the form of the purchased bonds. The goals of “printing money” include increasing liquidity (loanable funds), lowering interest rates, boosting the value of risk assets, and devaluing the dollar.
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