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1  Economy / Economics / How the stimulus money is created on: June 10, 2020, 06:24:16 AM
A lot of people are thinking that the stimulus money is printed freshly by the government and this can lead to inflation and that it is the end of the USD as a world reserve currency. But this isn't the fact, actually no new money is being printed by the Federal Reserve.

Here is the explanation of what's happening behind the scene:-




There are three sources of getting the stimulus money by the Treasury Department

  • Public Sector
    Like other parts of the government

  • Private Sector
       This includes companies, businesses and other investors
 
  • Foreign Investors
       This includes the sources from other countries which invest in the US


    Steps

  • So the Treasury Department issues IOU's(these are the same as of the ICO happening in the crypto sector) and give those IOU to these 3 kinds of investors in exchange of money.

  • Now the money they get by selling these IOU is given to the people of US as stimulus money

  • They in turn spend the money and it goes to the companies creating a positive economy

  • And then the companies buy more IOU if they want to

  • This cycle continues

So now it will be clear that the USD is still going to be the same that we used to know before the Lockdown.



Source: https://www.youtube.com/watch?v=PZpYgQiZXhI
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