The Federal Reserve does not print physical currency to conduct monetary policy. Instead, it creates bank reserves—digital liabilities of the Fed—by crediting the accounts that commercial banks hold at the central bank. When the Fed buys a Treasury bond from a bank, it simply types a higher number into that bank's reserve account. This is electronic money creation at the wholesale level.

The Fed's balance sheet expanded dramatically during quantitative easing:

2008: ~$900 billion in total assets
2014: peaked near $4.5 trillion
2020: surged past $8.9 trillion
2023–2024: reduced via quantitative tightening

Era	Fed Assets	Policy Tool
Pre-2008	~$900B	Open market ops (T-bills)
2008–2014	$4.5T	QE (MBS + Treasuries)
2020–2022	$8.9T	Unlimited QE
2023–2024	~$7.5T	QT (runoff)

Critically, reserves created by the Fed only become M1 or M2 money when banks lend them into the broader economy. If banks hold reserves idle (as happened post-2008), the money multiplier stalls—explaining why massive QE did not immediately produce hyperinflation.