> If that's a problem then the Fed can raise interest rates (or just stand by while they go up), but it can also make the USD it has on its balance sheet disapp

> If that's a problem then the Fed can raise interest rates (or just stand by while they go up), but it can also make the USD it has on its balance sheet disappear Those are the same thing. The Fed shrinks the money supply by inducing someone to surrender dollars in exchange for debt. This means there is increased supply, and the price of the debt goes down (i.e. the rate goes up).