No, the Fed buys the debt that the Congress creates... a variation on the Congress printing more money.
***The Fed has to balance the need for increasing the money supply with defending the value of the dollar. Their job is to act as our monetary authority***
Actually that is Constitutionally the Congress' job. I am not necessarily in opposition to Keynes, am pleased - in general - with the growing economy since WWII... which could not have happened on a pure gold standard. Unhappily, when we disconnected from the gold standard, carpetbagger politicians saw a way to waltz us down a garden path - a path that could soon lead to collapse. Of course they have assured their futures... as you stated: On the other hand a gold standard is a big problem for free spending politicians who want lots of government programs
***The Fed operated for 60 years under the gold standard, and re-imposing one won’t “destroy” the Fed in any fashion***
That is what raised my eyebrows about Q's statement; perhaps it will be clarified. A pure gold standard will hobble our economy... but some dynamic tie-in could prove beneficial - except to D.C. They would have to reveal that they really want it ALL - just like the USSR.
It seems that you are a fan of the Fed; I tend more towards Andrew Jackson's view, but the Congress is a hopeless guardian of our economic stability. As I say: {it appears that} we are stuck with the Fed.
The Congress just spends. THey don’t care where the money comes from. They “deem” it into existence. The Treasury sells bonds to the Fed to get the funds to keep the government running, as according to whatever continuing resolution they are operating under.
“No, the Fed buys the debt that the Congress creates... a variation on the Congress printing more money.”
Congress creates the national debt. The Fed doesn’t. You can’t equate the two. The Fed does not obligate you to a penny of debt, Congress does. That’s a fundamental difference.
“Actually that is Constitutionally the Congress’ job.”
The Constitution grants Congress power over coinage. It’s silent on paper money. Private banks issued their own paper money a hundred years before there was a Fed. Congress didn’t get to regulate the value of it.
In fact the question of legality went the opposite way when Lincoln printed the Greenback issue, because the Constitution is silent on the gov’ts ability to deal in paper money.
“A pure gold standard will hobble our economy..”
If by “pure” you mean a dollar’s worth of gold for every dollar issued, no such thing ever existed. The bulk of America’s money supply under the gold standard was always “bank money” or “credit money”, unbacked by gold. People don’t understand how the gold standard functioned.
“It seems that you are a fan of the Fed; “
Only if understanding what it does and what it does not do makes me a fan. I’ve read a lot of banking and monetary history from the Renaissance to the modern era. No huge modern economy can function or even exist without something like the Fed involved. JP Morgan understood this in 1908 when he funded the National Monetary Commission. The drive for the Fed came from the private banking world that was already trying to juggle the responsibilities that the Fed would take over.
“I tend more towards Andrew Jackson’s view, but the Congress is a hopeless guardian of our economic stability.”
If we want to be an agrarian economy like existed in 1836 we might be able to get by with a Jackson era banking system. Of course when Jackson shut down the 2nd Bank of the United States that was followed by six years of economic depression so maybe that wasn’t the best option.