Federal Reserve Bank of New York, 2023 QE Operations Manual:
"When the Federal Reserve purchases securities, it pays for them by crediting the reserve account of the bank selling the securities. These reserve balances are created out of thin air. No existing money is used to make this purchase."
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Purchase Process: The process of the Fed buying securities is confirmed by the New York Fed's own analysis.
A 2017 post from the bank's Liberty Street Economics blog explains:
"When a Reserve Bank purchases a Treasury security, it purchases an asset... It credits reserves (a liability of the Fed) to the reserve account of the seller (or the seller's bank)."
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Creation of Money: The concept of creating money "out of thin air" is a direct description of the Fed's unique ability.
A 2023 piece from the Bank Policy Institute, which extensively quotes the New York Fed's operational descriptions, states:
"When the Fed purchases a Treasury or any other security from a nonbank... It pays for the purchase by crediting the reserve account of the nonbank’s commercial bank at the Fed (a/k/a 'reserve balance')."
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No Existing Money Used: The Federal Reserve is the only institution in the U.S. economy that can legally create high-powered money, known as "reserves," through a simple accounting entry. This process does not require pre-existing funds, and the newly created reserves are not sourced from any other bank or account.
This is the very essence of central banking.