> It was the Fed’s own experiments that helped create all this national debt in the first place. > Here’s how it worked: The Fed would call up a banker at a pl

> It was the Fed’s own experiments that helped create all this national debt in the first place. > Here’s how it worked: The Fed would call up a banker at a place like J.P. Morgan and ask to buy $8 billion in Treasury Bonds from the government. Only about 24 banks — including J.P. Morgan — can sell Treasury Bonds directly to the Fed because those banks had a special designation as a “primary dealer.” > When the Fed buys $8 billion in Treasury Bonds from a primary dealer, it does so by creating 8 billion new dollars out of thin air. The dollars instantly appear inside a special account the banks have inside the Fed, called reserve accounts. > The Fed repeated this transaction over and over again until it had created the trillions of new dollars inside Wall Street’s reserve accounts.