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Sorry, I must admit that US federal reserve operations are not...

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FraserJC

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28/04/20

11:13

Post #: 44297314
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Originally posted by Protagonist: ↑

US government has now indicated its intention to introduce negative payroll tax, takeover debt of state and municipal governments, and suspend (and possibly cancel) student university debt. Pretty cool eh?

So where's all the money coming from? Government is raising money via the sale of treasury bonds (i.e, borrowing money). But the thing is, it won't need to pay this back, because the Fed is active in secondary debt markets buying all that debt back and (effectively) cancelling it.

In theory, there's no limit as to how much individual/corporate/government debt the Fed / US Treasury can extinguish. Theres no limit how much stimulus money is can create out of thin air.

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Sorry, I must admit that US federal reserve operations are not something I'm really all that familiar with, but can you please provide a link explaining how they can just cancel their own debt seemingly without any consequence?

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