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4/6. Just for clarification, the Federal Reserve does not print money. The Bureau of Engraving and Printing within the Treasury Department prints new paper money to replace old damaged bills. The U.S. Mint, also in the Treasury Department, strikes new coinage. The Fed "creates" or "destroys" money by buying and selling US Treasury securities on the open market. When the Fed buys securities from financial institutions, the amount of the purchase is transferred to the institution's reserve deposit account. Since there are now excess reserves, above what the Fed normally requires to be held, that extra money is now available to be loaned out to firms and households; expansionary monetary policy. Conversely, if the wishes to destroy money, it sells securities, withdrawing the funds from bank reserves to cover the sale. Reduced reserves mean institutions have less money available to lend; contractionary monetary policy