Courtesy of Lee Adler of the Wall Street Examiner
Normally when we think of printing money, we are talking about the Fed buying Treasuries, or some other securities from the Primary Dealers. The PDs then take the cash and buy Treasuries from the government. The Fed's asset base is thereby increased, and an offsetting liability, bank reserves on the Fed's balance sheet, also increases. As long as those reserves lie dormant at the Fed and banks don't use them to increase lending, there's not much problem with consumer price inflation, which the Fed pretends is the only thing that matters.
The Fed's been getting away with this kind of printing for a long time now, but there's been some seepage of money into financial assets, driving prices of bonds to the stratosphere and triggering "beneficial" rallies in stocks, and more malevolent rallies in commodities, particularly crude oil, but "core" consumer prices have lain more or less dormant. That lets Bernanke and Co. off the hook because that's what they use to measure inflation, and that's what the mainstream media reports. There's "no inflation." That's more or less in a nutshell what has been happening the past few years.
But there's another, different, type of "printing", and this one is literal, honest-to-god printing! Dr. Bernankenstein wasn't joking when he said the Fed had a printing press in the basement (cue evil laughter). In fact all 12 Fed district banks have printing presses in the basement, and they use them every week. The kind of "printing" I'm talking about is the actual printing of currency-cash, Benjamins et. al. Each week the district Fed banks usually print a total of a billion to several billion in cash, load it in armored trucks, and ship it out to the hinterlands, places like Staten Island, Cleveland, and Afghanistan. The cash shows up as a liability-Federal Reserve Notes- on the Fed's balance sheet because cash, Federal Reserve Notes, are a promise to pay... what? In other words if somebody shows up at 33 Liberty Street, NY with a wheelbarrow full of cash and demanded that the Fed pay up, well then... never mind. Just take my word for it. It's a liability.
Also on the Liability side of the Fed's balance sheet as reported weekly in
http://www.zerohedge.com/contributed/wtf-did-all-printed-money-go
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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