Wrong. That money has been used by the gubmint to keep the EBT cards live, pay our troops, hand over to the states to pay teachers and buy textbooks, and all of the other stuff that the government lays out nearly $4 Trillion a year to pay for.
There has been no “pay down” of the debt — it continues to grow. How long that goes, only the Bond holders know. When they decide that something paying them more than 2% is desirable and at equivalent risk than an instrument backed by the “full faith and credit” of the gubmint, well all bets are off then.
Of course, if it is the fed buying everything that may never happen. I wonder if the 6 or 7 Trillion of bonds held outside the fed would crater the $ if it was sold within a few days or weeks.
The money has already hit the market, in the form of EBT cards, federal government salaries, payments to doctors from medicare and all the other assorted goodies Uncle Sugar passes out. Once Dr. Jones gets paid, he makes investments and the only thing yielding anything above diddly nowadays is stocks. The run up since March of 2009 is the most obvious sign of inflation that there is.
Both are true. The government borrows the money to do that stuff by having the Treasury department sell bonds. Every month the Fed then buys about half that amount of bonds back with printed (really digitalized, it's all just in computers) money. That allows the investors to continue buying bonds. The government may still "owe" the money to the Fed, but they will never demand payment for it, so it's effectively monetized. And the pols don't need to do anything, which makes it the perfect solution as far as they are concerned.