Your point is correct: yes, we aren't running the presses to create those dollars --- in point of fact, those dollars were purchased on the open market in order to push the yen down and prop up the dollar against the yen.
My point is that there is still moral hazard from those dollars then being brought back to buy Treasury-issued debt since I see those purchases as essentially non-market driven.
Since the Treasury is getting non-market impetus in that borrowing, I think it is close enough to the moral hazard induced by straight monetization of the debt. However, your point that it is not in fact monetization is certainly correct, and indeed inflation is the result that one most fears from the lack of market discipline introduced by monetization of the debt.
However, overborrowing due to lower interest rates and availability of easy credit is another worry to my lights. (Fortunately, our tax revenues lately have been climbing due to our increased economic activity which I think is a direct result of the very wise tax cuts that the Bush administration pushed through. Our need to borrow new money has been lessened quite a bit recently --- I would very much like to see enough progress on that front that we could start reducing some of our debt.)
Excellent! I've asked conspiracy nutbags before (obviously, you're not one of them), just how much "profit" the evil foreign controllers of the Federal Reserve earn each year in dividends. They never answer. I'm not sure if it's because they can't find the amount of the dividends or if they found the amount and it's too tiny to confirm the evil conspiracy they decry. Have you ever seen the dividend figure? What is it? A fixed amount or does it grow every year?
The dividends are like dividends paid on preferred stock in that they pay a flat 6% on the face amount of the stock owned by a member bank. (To be a bit more precise, I think that the stocks are like cumulative preferred stock since if the Fed were to miss a dividend payment, that deficit would accumulate to be paid later. But I believe that I have read somewhere that they are considered a common stock. (Perhaps because of voting rights? Or my memory may be off, and perhaps they are just considered a cumulative preferred stock.))
The amount of stock by any one banking institution is not a significant figure --- I believe that you can determine the exact number of shares held by each institution by looking at the text of the current laws in effect with regard to the Federal Reserve Act --- but it's not going to be a huge number of shares per institution since preventing such accumulation was one of the concerns of the designers of the system.
I'm not sure what "non-market impetus" is supposed to mean.
I think it is close enough to the moral hazard induced by straight monetization of the debt.
Monetization hazard would be, "this currency is going down, they print it to pay the bills". Like Russia in the early 90s. This hazard is, "this currency is going up, the Japanese keep buying it". I'm not sure they're equivalent.
However, overborrowing due to lower interest rates and availability of easy credit is another worry to my lights.
I see your point, but if you think our congresscritters sit around and say, "If only the Japanese would buy more of our debt, we could pass more wasteful spending".....
Our need to borrow new money has been lessened quite a bit recently --- I would very much like to see enough progress on that front that we could start reducing some of our debt.)
Me too, as long as the surpluses were the result of increased growth and reduced spending, not higher taxes.
The dividends are like dividends paid on preferred stock in that they pay a flat 6% on the face amount of the stock owned by a member bank.
That's what I thought.
The amount of stock by any one banking institution is not a significant figure
That's what I thought. I had one clown, recently, who claimed that the Fed somehow took all the gold owned by the US government, sold it and split the profits with their evil foreign overlords.
That person obviously thought the Fed pays capital gains instead of dividends to the shareholders. But then again, he isn't too bright.