What this is is the equivalent of a person charging up a credit card, then getting another credit card, and paying the first one off. Meanwhile, interest accumulates, and the amount gets larger.
The shiny wet money that the Fed pays for the bonds is used by the government to pay Social Security checks, government employees, government contractors, and on and on. It goes out into society, and the dollar becomes worth less every time. The Fed holds the bonds, which theoretically they will turn over someday in return for money plus interest. What they actually do with them, God knows.
They could theoretically "disappear" them for the government, in the same way that a very, very friendly bank could tear up your loan papers after you'd borrowed a million dollars. I have no idea if that's legal, or even possible.
Current Events » in reply to Printing money, continued...
Re: I sort of concede the point...
The whole thread (23 posts)
- Fed to print up another $600 billion