6 ms·

Taxpayers don’t need to bail out the Fed. The Fed literally creates money ex nihilo.

• baconandeggs 6y ago
  The Fed creates the money, but the taxpayers give it value.
• clairity 6y ago
  > "The Fed literally creates money ex nihilo." that's too simplistic. the fed has wide latitude (probably too wide), but it should correlate with the (fuzzy, hard to accurately measure/model) productive capacity/velocity of the (globalized) economy, not just an unlimited well only constrained by inflation's devaluatory noose. moreover, considering our technological progress and trajectory, i'd love to see us revisit the idea that money can only be injected into institutions (via central banks), which was a limitation of scope imposed by the practicalities of pre-21st century life. it's also a gatekeeper's gold mine on a no longer necessary choke point. we should move towards injecting money straight into the hands that create value, not into those of middlemen like bankers.
  • JackFr 6y ago
    I don't disagree with you about the role of the Fed. But from a practical, tangible, rubber-meets-the-road, this-is-how-they-do-it point of view when the Fed buys something, it pays for it by writing a new number in my Fed account. That new number is money.
• olliej 6y ago
  ... um, taxpayers are the fed. So any time the fed takes on a debt made by a business at anything other than a discount the fed is bailing out bad business decisions, and that means the taxpayer is paying for it. If the fed just “prints money” to cover those debts the real value of the USD collapses, and that hurts individual taxpayers more than the big businesses being bailed out.
  • Nbox9 6y ago
    The Fed provides stability around the USD market. It deploys a wide variety of polices that attempt to manage inflation, deflation, liquidity, and overall confidence in the USD. Without this stability the USD would be significantly less valuable as a medium of trade, a store of value, and as a tool for reconciling debts.
    • olliej 6y ago
      yes, but that's why it doesn't just "print money". the fed is never going to simply print money to pay off debt because that would necessarily clobber inflation and dollar value policy. I'm not sure why people are downvoting this :-/