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If the Fed prints money and buys bonds, then in the future when they need to take that money back out of circulation in order to control inflation, then they ju
by evanpw 11y ago
If the Fed prints money and buys bonds, then in the future when they need to take that money back out of circulation in order to control inflation, then they just sell the bonds.
If the Fed prints money and gives it to people, getting nothing in return, then the only way to take the money back out is to raise taxes, which will result in deadweight losses.
- tormeh 11y agoThe central bank can't control the price at which the market will buy the bonds, but that's a good point. That said, has hyperinflation ever occurred without the central bank printing money while inflation is above-target? Private holders of money can flood the market with cash, but only the central bank can sustain that flood for a really long time.