Printing money to increase the M2 supply is a common misconception. What actually happens is the Fed expands its monetary base through treasury purchases which then allows banks to lend more money. So not money printing just allowing more lending.

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Let’s lend them both money just to be safe.

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They issue guidelines for mortgage debt for banks to lend, and buy loans funded by banks like Wells and BAC, then bundle the loans and sell them to investors. Basically if you hear the term 'conforming loan' it's either from Fannie Mae FNMA or Freddie Mac FMCC. They have been in a conservatorship since 2008, and are about to be 'released' Way more info available than the snippet I provided. It's worth a read.

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If you can lend me the $500 I'll pay you back out of my profit

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