The leading sentence to this article says the deficit increased $2,000,000,000,000 in 3 months. Are you saying it actually stayed flat or decreased?
>>The leading sentence to this article says the deficit increased $2,000,000,000,000 in 3 months. Are you saying it actually stayed flat or decreased?
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Neither Quantitative Ease nor Quantitative Tightening are part of an annual deficit.
The deficit is funded by borrowing money. Borrowing money is done by selling Treasury bonds. The lender owns the bond and collects the interest paid on that bond.
The Fed bought several trillion of the bonds. They created money from nothingness and bought bonds with it. They return the interest they get from Treasury . . . to Treasury. (All of the Fed’s balance sheet are not Treasury bonds, some of it is Mortgage Backed Securities that caused the 2008 disaster, and they bought those MBS from gov’t agencies like Fannie Mae. Ignore that, it is parenthetical).
The big jump in annual deficit much in the news lately is the Supreme Court ruling about student loan payments. Expunging those either increases or decreases the deficit because it is applied to the budget all at one time, or erased . . . before overruled by USSC.
Fundamental rule: Money is created by the Fed in almost whimsical fashion. It comes from nothingness. There is no requirement that any rules/laws involving it have to be logical. People would have actually died in 2008 if the Fed had not flooded the system with money. ATMs would have failed. Cash to buy food would have disappeared.
Don’t imagine US wealth is from capitalism or democracy or anything else of that sort. It comes from thin air.