The following statements by the Chairman of the Federal Reserve, made during hearings of the House Committee on Banking and Currency, September 30, 1941, illustrates the Fed's ability to "create" money. [Marriner Eccles being Chairman of the Federal Reserve Board at the time.]
Congressman Patman: "How did you get the money to buy those two billion dollars worth of Government securities in 1933?"
Marriner Eccles: "Out of the right to issue credit money."
Patman: "And there is nothing behind it, is there, except our Government's credit?"
Eccles: "That is what our money system is. If there were no debts in our money system, there wouldn't be any money."
Congressman Fletcher: "Chairman Eccles, when do you think there is a possibility of returning to a free and open market, instead of this pegged and artificially controlled financial market we now have?"
Eccles: "Never. Not in your lifetime or mine."