The Real News Network has the article The Fed and the Crisis. This is “a commentary by Jane D’Arista assessing the actions of the Federal Reserve in managing the economic crisis.”

I want to particularly emphasize the following quote even though the commentary is filled with other good information, too.

The configuration which we face now, all the other institutions—mutual funds, investment banks, asset issuers, insurance companies—contribute three times as much credit to the system as does the Federal Reserve—or, excuse me, as does the banking system.

I have been trying to make this point in the blog from its inception, but this is the first time I have heard an expert provide quantitative figures. The factor of three is probably even larger than I have been assuming. Remember the factor of three is not a comparison between the private sector and the Federal Reserve Bank. It is a comparison between the enumerated parts of the private sector — mutual funds, investment banks, asset issuers, insurance companies — and the banking system. The Federal Reserve bank is only part of the banking system. The private sector banks create a lot of the credit that is created by the banking system.

So the next time you hear some politician or some business news medium railing against the Federal Reserve “printing” money, just remember that the private sector “prints” money at more than three times the rate of the Federal Reserve Bank. In other words, less than one third of the credit being created is being created by the Federal Reserve Bank.