This is a common misconception: that treasuries somehow don't lead to inflation but reserves (aka electronic cash) somehow do. Why? Both are extremely liquid, b

This is a common misconception: that treasuries somehow don't lead to inflation but reserves (aka electronic cash) somehow do. Why? Both are extremely liquid, but treasuries pay more interest than reserves (yes, reserves do pay interest [1]). The only difference between treasuries and reserves is, in fact, the interest rate an the fact that we call one "debt" and the other "money". But they are both US federal gov't liabilities denominated in USD. [2] The bulk of the impact on inflation already happened... when the treasuries were issued in the first place. They aren't waiting to be exchanged for reserves to suddenly cause inflation. [3] So, if anything, the Federal Reserve swapping one gov't liability for another paying lower interest could lead to less inflation, not more. [4] [1] https://fred.stlouisfed.org/series/IOER https://fred.stlouisfed.org/series/IOER [2] http://bilbo.economicoutlook.net/blog/?p=31715 http://bilbo.economicoutlook.net/blog/?p=31715 [3] http://www.cfeps.org/pubs/wp-pdf/WP37-MoslerForstater.pdf http://www.cfeps.org/pubs/wp-pdf/WP37-MoslerForstater.pdf [4] https://www.stlouisfed.org/publications/regional-economist/july-2016/neo-fisherism-a-radical-idea-or-the-most-obvious-solution-to-the-low-inflation-problem https://www.stlouisfed.org/publications/regional-economist/j...