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Not really - What I assume you are thinking about is the Fed buying the treasuries(with their money printing skills) that are issued in their QE program. Howeve

Not really - What I assume you are thinking about is the Fed buying the treasuries(with their money printing skills) that are issued in their QE program. However QE is winding down, and a larger and larger % of that borrowed money comes from private investors using their own money. While after the recession the fed was responsible for buying more than half of the treasuries for years, those days are over.

analyst74 9y ago
> While after the recession the fed was responsible for buying more than half of the treasuries for years, those days are over. That is hard to say, fed is planning to wind down QE, but it's also trying to hit a certain interest rate, when those two objective collide, i.e. interest rate going up too fast, it'll be interesting to see what happens then.
nerfhammer 9y ago
https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL the fed hasn't increased its bond holdings in 4 years. treasury debt has obviously increased over the same time period. so, yes, this debt is not just financed by printing money, despite whatever they're saying on youtube these days.
jganetsk 9y ago
Yes really. It's called modern money theory. https://www.youtube.com/watch?v=TDL4c8fMODk https://www.youtube.com/watch?v=TDL4c8fMODk https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-trump.html https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-... The US federal government pays for things by crediting bank accounts (hence money creation). The fact that the federal government also issues Treasury securities is a political constraint, not strictly required from a technical standpoint. The Federal Reserve then uses Treasures as a reserve drain when they are trying to hit their overnight interest rate targets.
- tryptophan 9y ago
  The way I understand it is that the fed has to(maybe not in law, but in practice) sell securities to accomplish its mandate of maintaining a stable currency. If they did not then it would cause lots of inflation. Is that correct?
  - jganetsk 9y ago
    https://en.wikipedia.org/wiki/Open_market_operation#United_States https://en.wikipedia.org/wiki/Open_market_operation#United_S... They are mainly trying to control the size of bank reserves by buying and selling securities, with the goal of hitting a target interest rate. When they are worried about inflation, they increase interest rates.

analyst74 9y ago

> While after the recession the fed was responsible for buying more than half of the treasuries for years, those days are over. That is hard to say, fed is planning to wind down QE, but it's also trying to hit a certain interest rate, when those two objective collide, i.e. interest rate going up too fast, it'll be interesting to see what happens then.

nerfhammer 9y ago

https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL the fed hasn't increased its bond holdings in 4 years. treasury debt has obviously increased over the same time period. so, yes, this debt is not just financed by printing money, despite whatever they're saying on youtube these days.

jganetsk 9y ago

Yes really. It's called modern money theory. https://www.youtube.com/watch?v=TDL4c8fMODk https://www.youtube.com/watch?v=TDL4c8fMODk https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-trump.html https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-... The US federal government pays for things by crediting bank accounts (hence money creation). The fact that the federal government also issues Treasury securities is a political constraint, not strictly required from a technical standpoint. The Federal Reserve then uses Treasures as a reserve drain when they are trying to hit their overnight interest rate targets.

tryptophan 9y ago
The way I understand it is that the fed has to(maybe not in law, but in practice) sell securities to accomplish its mandate of maintaining a stable currency. If they did not then it would cause lots of inflation. Is that correct?
- jganetsk 9y ago
  https://en.wikipedia.org/wiki/Open_market_operation#United_States https://en.wikipedia.org/wiki/Open_market_operation#United_S... They are mainly trying to control the size of bank reserves by buying and selling securities, with the goal of hitting a target interest rate. When they are worried about inflation, they increase interest rates.