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To: Toddsterpatriot
The Fed doesn't buy bonds from the Treasury.

Yeah, that's kind of a technical way of putting it. The Fed doesn't buy the bonds from the Treasury directly, but the Fed does buy the bonds from the treasury, albeit in an indirect way. Instead of buying the Treasuries directly, it has a bunch of its member banks buy the bonds on their behalf. Those member banks are still buying the bonds from the treasury effectively on behalf of the Federal reserve. The Fed then pays for the bonds buy issuing a line of credit for them. Regardless, all of those US Treasuries all end up on the Feds balance sheet anyway. So it is in effect, the Fed doing the buying, albeit in a roundabout way.

60 posted on 09/18/2013 3:23:37 PM PDT by old republic
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To: old republic
Instead of buying the Treasuries directly, it has a bunch of its member banks buy the bonds on their behalf.

It doesn't tell banks to buy Treasuries.

The Fed then pays for the bonds buy issuing a line of credit for them.

The Fed credits the account of the Primary Dealers they buy from.

Regardless, all of those US Treasuries all end up on the Feds balance sheet anyway.

At this point, $45 billion per month, not all the Treasuries issued each month.

72 posted on 09/18/2013 6:16:27 PM PDT by Toddsterpatriot (Science is hard. Harder if you're stupid.)
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