Debeo Summa Credo: Assume the treasury has to issue $60b per month to fund the deficit.If all $60b of that comes from investors, there is no money created. Every dollar that went to buy treasuries already existed and was held by investors prior to buying treasuries.If the fed is buying $40b of those treasuries (these numbers are realistic in today's environment), only $20b comes from outside. The other $40b was created by the fed to buy treasuries. The fed basically says to the treasury: here's $40b of crisp new dillar bills to buy stuff with, pay us back later. Yes, interest rates are affected by this, because the newly created dollar bills are a supply of capital that drives down equilibrium interest rates. But new money is created. If and when the fed shrinks it's balance sheet, money supply is reduced.
Links are submitted by members of the Fark community.
When community members submit a link, they also write a custom headline for the story.
Other Farkers comment on the links. This is the number of comments. Click here to read them.
You need to create an account to submit links or post comments.
Click here to submit a link.
Also on Fark
Submit a Link »
Copyright © 1999 - 2017 Fark, Inc | Last updated: May 30 2017 02:40:15
Runtime: 0.102 sec (101 ms)