New York Fed President Bill Dudley

Dudley, a former Goldman Sachs economist, also rejected the widely held view that the Fed is really printing money. “What we’re doing is, when we buy Treasury securities, we are increasing the amount of reserves in the banking system.


For those reserves to actually create money, the banks actually have to lend those reserves out.


The problem with the U.S. economy now is that there is insufficient lending and he doesn’t expect the Fed’s purchase program to solve that problem because there are ample reserves in the system. He expects the current program to help the economy by lowering interest rates for businesses and consumers.

Ok, he mostly gets it. Like when one of the slow kids in class gets something close enough to right and gets a passing grade.

(If anyone reading this knows him personally, try sending him a copy of my book, thanks)