Is FED printing more money? FED committed today (18 march) to buy government and semi-government bonds for 1.2 trillion dollars.  The recent move by the FED is targeted to lower the yields of the government and semi-governmental bonds. But, what it is really? When a FED purchases assets, it effectively injects more money into the economy; in fact, it is equivalent to printing more currency. It is unclear what the medium term effect will be, beyond the positive initial reaction. Buying government bonds can be also interpreted as FED loaning funds to the government – but FED is the government? If we agree to the notion that FED is part of the government, the net effect is clear: WE PRINT MORE MONEY. Inflation tax was common in history when government printed more money to finance large projects or widening deficits. Using this measure extensively frequently led to inflation and devaluation of the currency.