Is printing money free money or debt the government has to pay off?

Factual Questions
41

Currency circulation at the end of 2022 was $2.3 trillion. Of that $1.85 trillion was in $100 bills. Most of those bills are believed to be abroad. Denominations of 1-20 dollars totaled to $288 billion. Most of that is in the US.

So most US currency is abroad, held by private citizens of other countries in larger US denominations. Federal Reserve Board - Currency in Circulation: Volume

But if bank orders money from Bureau of Engraving & Printing or Federal Reserve is there not debt?

Banks order bills from the Fed. While banks do borrow from the Fed, to get the green pieces of paper they hand over electronic deposits.

There is something called a money multiplier, but it’s best to think of it in terms of bank deposits. These slides walk through the concepts. https://www.albany.edu/~bd445/Economics_350_Money_and_Banking_Slides_Spring_2013/Money_Multiplier.pdf

42

No, it’s a straight trade. The bank has electronic dollars in its accounts. It exchanges those dollars for physical bills from the Bureau of Engraving and Printing.

You can do the same thing by buying currency from the U.S. Mint with a credit card. It’s designed for people who collect currency, so it would be silly to do if you just want folding money, but you could do it.

43

I thought you just said when the government has no money they issue bonds or treasure bills and don’t go to federal reserve and say print me 3 trillion dollars for war or disaster or what ever.

44

Also money in circulation is debt? if money in circulation is debt than that 2 trillion dollars in circulation is debt?

45

Money in circulation is not debt.

Try this. If you put oil into a car it does not change anything about the level of gas.

In this analogy money is oil, gas is debt. Two different things.

46

I’m not sure if you are responding to me, but if you are:

It’s true that the government cannot print currency to make up for a shortfall in revenue. That has nothing to do with a private bank obtaining currency from the Bureau of Engraving and Printing.

Note that physical currency accounts for only a small share of economic activity in the United States, and even less in some other countries.