At this stage, when the bank makes a loan, the money supply rises by more than the amount of the open-market operation.

FORBES: How Has The Fed Evolved?

The monetary expansion following an open-market operation involves adjustments by banks and the public. (To find out more, see Formulating Monetary Policy.) The bank in which the original check from the Fed is deposited now has a reserve ratio that may be too high.

FORBES: How Has The Fed Evolved?

The only way that a fair price is achieved for any economic goods is the operation of the open market.

FORBES: Inside The Pricing Of A $300,000-A-Year Drug

The issue is not that the Fed creates money with open market operation.

FORBES: 'Quantitative Easing' Is A Toxic Phrase for a Routine Policy