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View Full Interview. The Legislative Branch is the only part of the government that can  authorize the borrowing of money. The Executive Branch can request  the money be borrowed but cannot authâ¦orize it. Avid political scientist with a strong focus on US History, including the political & military aspects of the US Civil War.
4. When the fed wants to INCREASE the money supply, the Fed will purchase some of those bonds from a bank -- the Fed trades cash to the bank for the bonds. 5. The bank now has more cash on hand, so the bank does what banks do with cash -- it'll lend it out to a customer taking a loan.ere's the deal: 1. You deposit $1,000 at your bank. They do not hoard that currency in their vault. The bank must get a return on that money, so the bank will 1) loan it out, which it can do if it has cash on hand, or 2) make a short term investment in gov't bonds, keeping the bonds as an interest-paying asset.