4 ms·
The fed is not a part of the US Government financially. When the fed receives cash, it is destroyed. It does not go back into treasury coffers.
by Ergo19 4y ago
The fed is not a part of the US Government financially. When the fed receives cash, it is destroyed. It does not go back into treasury coffers.
- cs702 4y agoCash received in the form of interest payments (income) is sent to the US Treasury.[a] Cash received in the form of principal payments is "destroyed" (by debiting outstanding assets with corresponding credits to outstanding liabilities in the Fed's balance sheet). [a] https://www.wsj.com/articles/higher-interest-rates-fuel-losses-at-the-federal-reserve-11667208602 https://www.wsj.com/articles/higher-interest-rates-fuel-loss...
- landoftheice 4y agoAnd if one ponders this dynamic for long enough, one realizes that there is not enough money in existence to pay all of the debt in existence. Or in other words, a pressure cooker type system of infinite growth is created. By no fault of their own, a certain number of debtors are guaranteed to default on their loans - the pressure cooker rat race. And in practice the next traunch of currency created through debt in say, a 10 year period, is necessary to pay off the previous 10 years of debt that otherwise would not have enough currency to pay off - the 'infinite' growth dynamic. In this system the only thing worse than creating more debt (currency) is to not create more debt (currency).
- barsonme 4y agoI may be misunderstanding, but from the linked article: > “We’ve returned close to $1 trillion to the Treasury over the last 10 years. We did not keep that revenue in the Fed,” St. Louis Fed President James Bullard told reporters last month.
- landoftheice 4y agoThe interest paid on debt is not destroyed but the principal is destroyed.