Printing money electronically or by printing press, what's the difference? The result will be the same...

Printing Money Not Actually in Bernanke’s Bag of Tricks

Of course, the Fed is not printing up money. How could we have been so naïve? The days of printing up money are long gone. Now, the Fed doesn’t do anything of the sort. Instead, it merely buys US government debt from banks. That’s not printing money. Nope. Not at all. Not even close.

But wait. How does it pay for the bills, notes and bonds it buys?

Oh, well, it certainly doesn’t print up money. Instead, it merely credits the banks with the money…electronically. No printing involved. The banks then have money that didn’t exist before.

The banks are supposed to lend it out. For every dollar they get from the Fed they can lend out 10. That’s how it works. So, IF anyone wanted to borrow the money, and IF the Fed had bought, say, $1 trillion worth of US government debt, the banks COULD lend ten times that amount…thus increasing the supply of money in circulation by $10 trillion.

Does that sound like printing money to you?

Nah… Of course not. Does it sound like it might cause inflation? Well, yes… It would be rather surprising if it didn’t. Consumer price inflation is now running at about 1% per year. Why so low? Because, so far, the banks aren’t lending. The Fed adds money to the system. But it doesn’t get passed along.

Link:
http://dailyreckoning.com/