Economics

How Money is Created (Monetary & Quantitative Easing)

TL;DR New money enters circulation through a cycle: the government borrows from the public (creating debt), the Federal Reserve buys that debt (Quantitative Easing), and banks lend out deposits (Monetary Easing). The diagram below shows the full loop. An educational diagram I just finished creating showing how new money gets into circulation in the USA. Here I explain how the government borrows from the people, aquiring debt, as well as how new money is created and put into circulation.