Finance, Forex and Investments

When the Central Bank says its going to pump Billions into the US economy where does the money come from?

And who makes money off the interest? I keep hearing on the news that this Central Bank is going to bail out the economy but they never say where the cash comes from, and where it is spent or that it may make things worse. What am i missing here??

Public Comments

1. In the US, the Department of the Treasury prints the money. The central bank is called the Federal Reserve Bank. The Feds has the authority to purchase other debts. When purchasing such debts, usually government issues or sponsored debts, the Fed will send money into the market in order to purchase the debt instruments. However, the money pumped into the economy in this sense is the monetary credit created not printed. Once these debts are purchased, they become an asset on the balance sheet of the Feds. When these debt instruments pay the interest, they become the interest income to the Feds. Question of where does the money come from? It is created through the Federal Reserve Bank s credit. There is no paper notes, however, as long as the dollar value holds up, the Feds can continue create the amount. In the long run, when other central banks loose the faith in the dollar, the dollar value in theory will decline. Since the financial crisis of 2008, some economists calculated that the US dollar has declined 20%. Average consumers can only detect such losses through their purchase of the gasoline price or the commodity purchased at Walmart. In another word, you pay more now than in 2008 for gasoline and merchandise made in China imported by Walmar.
2. It is a totally false financial manipulation of the economy and the bottom line is that it only proves were are in a deep economic recession - it does not solve the economic problem - it only appears on the surface to be improving. Most likely this is a political solution to an otherwise problem they can't solve. The cash comes directly from the US Treasury that has been printed with absolutely nothing to back it up - just paper