Q&A: Who/what entity gets the value of newly printed money when it is transferred to the federal reserve banks?

Question by starshinelady: Who/what entity gets the value of newly printed money when it is transferred to the federal reserve banks?
As most people are aware, the United States does not own the Federal Reserve banking system; private shareholders, (very wealthy individuals,) own those banks. So, when the U.S. decides to “expand” the money supply and prints up a few billion more in cash, then sends this money over to the various federal reserve banks, to whom does the initial value of that money accrue? Think about this! It’s not like the U.S. government “sells” the bills to the federal reserve banks in return for “something” – it just send those bills over and says “here, start distributing this money. So the federal reserve sends it to other banks to make loans, etc. It would appear to me, (but I could be wrong,) that the value of all this money is just “given over” to those persons who own the stock in the federal reserve banks. I really have been wondering about this question for a long time, and it is really puzzling me. What value could the gov’t get out of these transfers of cash? Is it given “credit”?

Best answer:

Answer by Captain_Neon
The issuing of fiat paper money is a way that the federal government gets money without taxation. While the War in Iraq is a factor, the main reason for the higher price in gasoline is because of lack of confidence in the US dollar in the global market. The issuing of paper money is directly equivalent to inflation.

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