I am trying to understand where money comes from. I know that the central bank provides the government with money in exchange for bonds, but how do private investors get a hold of them? Does the central bank sell them on, or does the government also sell bonds directly to private investors? If the government sells bonds directly to private investors, why does it do this, as opposed to exchanging the bonds for money at the central bank?

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Originally Posted by pdubz

I am trying to understand where money comes from.

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Hello p:

This ISN'T simple.. First, you have to define "money". Are you talking about currency, wealth, or the money supply? Those are all "money", and they're NOT the same thing. It MAKES a difference...

If you're interested in how bonds get bought and sold, that's one thing. But, it has NOTHING to do with where "money" comes from.

Where do you want to go from here?

excon