2 ms·

Insolvency to who? Who is the Fed final debt holder? (It sounds harsh but I'm genuinely interested in your response)

• cm2187 4y ago
  The debt of the fed is the money it creates, typically through reserves (ie a commercial bank has a bank account at the central bank), and a little bit the paper money (which is an IOU from the Fed). But insolvency means the value of your equity is negative, ie your debt exceeds your assets. At this stage a private company would automatically be declared bankrupt, it’s not clear what would happen to the fed. Printing money won’t solve the solvency (you create as many assets as liabilities), but it’s not going to run out of cash either because it can print more.