The US Treasury doesn't use FRNs, why would they borrow them?
or to other subsidiary FED member banks at a discounted rate, so it can be put into circulation.
The Fed doesn't lend FRNs to banks and they certainly wouldn't do so at a discount. What a silly claim.
If your bank needs FRNs, their reserve balance (think checking account for a bank) at the Fed is debited. At 100% of their purchase.
Excuse me, but you don’t know what you are talking about.
Money, currency, has no intrinsic value. It is worth only what you and I and everyone else who accept it agrees it is worth, nothing more. It cannot be exchanged for any intrinsic commodity of fixed value, such as a Troy ounce of Fine Silver or the same in some fraction of a fixed amount of pure Gold.
It is lent into existence as a liability to the borrower, an IOU, that means it has to be on some entities books as an asset on which they intend to make a profit. Since it is not a coupon bearing debenture, it’s essentially lent out at a discount below face value. That difference is their profit. That is what the Federal Reserve discount rate is. Such a discount is fractional on the face value, but they lend can out billions and volume is king. . . and they essentially create what they lend out from of thin air.
The Federal Reserve Banks don’t even need depositors to provide what they lend out; if it’s currency it gets printed for them, or if it’s just digital money, it’s created by a computer which is even cheaper for them to whip up from a froth of electrons. With digital money the Fed banks don’t have to pay the Bureau of Engraving its few cents per note for digital fiat currency! Look Ma, no fancy rag paper or special ink to pay for! They just make a debit entry in their books and voilá, they’ve got money their member banks can draw on at need. . . or they can send wherever they want.
Only 8.3% of the world’s money is now represented by paper or coin money. The rest is digital, created exactly the way I just described it. . . Made out of nothing except someone’s decision for more money and some handy electrons.
By the way, did I happen to mention that by education I am an economist, specifically a Chicago school monetarist type economist like the late Milton Friedman, although I’m not practicing? That said, it’s a truism that you could lay every economist head to toe, endlessly, and still never reach a valid conclusion. That’s why I’m not practicing! ;^)