Share
2,730 Posts.
lightbulb Created with Sketch. 107
clock Created with Sketch.
22/07/14
15:54
Share
Originally posted by timber1956
↑
Hi there Dillinja
"when the treasury issues bonds and the fed buys them in return for monetary liquidity then there is money creation out of thin air, and this cheap money is having an inflationary result"
I am puzzled.
If the US Treasury (who banks with the Fed) issues bonds - taking money out of the commercial banking system - and the Fed buys the bonds back - putting the money back into the commercial banking system - how is this zero net flow of cash going to provide money for increased spending that might make prices of higher?
Expand
Timber, if, as you say, Treasury bonds and payments for them pass back and forth between the US Treasury and the Fed banks, how can this zero-sum-game grow the US economy?
23.