<p>"Money" in this case is a liability of the Federal Reserve - mainly reserve balances held at the Fed, but also curency in circulation (which was largely stable).</p>

<p>Like any other entity, the Fed creates liabilities by issuing them. It did this by buying bonds in the open market (mainly Treasury and mortgage securities).</p>

<ol>
<li>The seller of the bond (more likely, its bank) will get a deposit ("money").</li>
<li>The Fed gets an asset (the bond).</li>
</ol>

<p>As people have found out, there is little to stop the Fed from doing this. They get matched assets and liabilities, and the assets it buys pays a higher rate of interest than its liabilities.</p>

<p>Other entities have to worry about funding risk when conducting such trades -- others may fear bankruptcy, and not lend them money. Very few people worry about the central bank running out of money.</p>

CC BY-SA 3.0
2017-10-04T21:12:31.097Z
2017-10-04T21:12:31.097Z
Brian Romanchuk
<p>Who paid for that $4.5 trillion balance sheet?</p>

<p><a href="https://www.cnbc.com/2017/09/19/hedge-fund-titan-ray-dalio-says-to-succeed-in-markets-you-need-to-bet-against-the-consensus--and-be-right.html" rel="nofollow noreferrer">https://www.cnbc.com/2017/09/19/hedge-fund-titan-ray-dalio-says-to-succeed-in-markets-you-need-to-bet-against-the-consensus--and-be-right.html</a></p>

CC BY-SA 3.0
2017-09-24T01:04:27.160Z
The writing in that article is terrible. I can see how anyone could be confused by this article
Gabriel Fair
<macroeconomics><federal-reserve>
The Fed has a $4.5 trillion balance sheet: where did they get that money?
user310291
# The Fed has a $4.5 trillion balance sheet: where did they get that money?

(Asked by: username_0 on 2017-09-23)

Who paid for that $4.5 trillion balance sheet?

<https://www.cnbc.com/2017/09/19/hedge-fund-titan-ray-dalio-says-to-succeed-in-markets-you-need-to-bet-against-the-consensus--and-be-right.html>

**Tags:** macroeconomics, federal-reserve
> **Comments:**
> **username_1**: The writing in that article is terrible. I can see how anyone could be confused by this article  

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## 1 answers

### Answer by username_2 on 2017-10-04. Score: 1

"Money" in this case is a liability of the Federal Reserve - mainly reserve balances held at the Fed, but also curency in circulation (which was largely stable).

Like any other entity, the Fed creates liabilities by issuing them. It did this by buying bonds in the open market (mainly Treasury and mortgage securities).

1. The seller of the bond (more likely, its bank) will get a deposit ("money").
2. The Fed gets an asset (the bond).

As people have found out, there is little to stop the Fed from doing this. They get matched assets and liabilities, and the assets it buys pays a higher rate of interest than its liabilities.

Other entities have to worry about funding risk when conducting such trades -- others may fear bankruptcy, and not lend them money. Very few people worry about the central bank running out of money.


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