What I don’t understand is why we still hold on to the idea that it is necessary for the government to “borrow” money.
We don’t pay it back. So what’s the point?
We need $500B? We borrow $500B. Now we owe the Fed $550B because interest jumps in, and we just lost an additional $50B. The Fed makes $50B and we have $500B in our pocket. Which we aren’t going to pay back.
Why not literally print the money without “borrowing” it and running up any interest payments?
As it is, I think we just shovel money at the Fed for no real benefit to ourselves.
Modern monetary theory. Government simply creates the money it needs or wants to spend. The Fed, is the tool, but old quaint notions of accountancy remain. Debits and credits to balance the books. The "goodwill" entry on the balance sheet must be a whopper.
The worth of currency is the ability of the currency-issuer to pay debts.
Ideal: Banks try to maintain an up-to-date status of that.
Interest paid to the Fed reverts to the Treasury Department. The Fed doesn’t get to keep anything above basic expenses. The Fed doesn’t own their bond holdings. They use them for adjusting the money supply in the banking system.