Re: Dollar assets key part of China’s reserves:Xinhua
On Aug 14, 2007, at 11:28 PM, Mike Ballard wrote:
I’m ignorant of where these cash injections go. I mean, do they go
directly into various private bank accounts as a kind of temporary deposit
or? And where does this cash come from? Previousl tax collections or hot
off the printing presses.
Essentially the Fed - or any central bank - goes into the markets and
buys bonds using money created out of thin air. The sellers are the
big commercial and investment banks. The central bank may sell its
purchases back into the markets days or weeks later, or they may just
keep them and earn interest.
Doug