[LukeL]

The Fed buys bonds and debt related securities from banks under a secret account. They do this wish freshly created money.

[dwilkins]

Ironically, the best solution would be to simply print money to pay for what they need, especially paying off debt as it comes due. The problem is borrowing the money from the banks to create currency. That creates an inflation acceleration that is terribly destructive. I’d prefer they didn’t run at a deficit, but if they’re going to do it straight printing money is the best option.