The Fed prints money not only when it is conducting monetary policy but also when it is paying bills as the fiscal agent for the federal government.

Question

Quizplus · Accepted Answer

The Fed is the fiscal agent for the federal government, meaning it handles tasks such as processing government payments, collecting tax revenue and selling government securities. When the Fed pays bills on behalf of the government, it creates new money electronically to do so. This is because the government does not have a specific account balance that it must draw from when spending; instead, the Fed simply creates the necessary funds when needed.

The Fed Prints Money Not Only When It Is Conducting