That explains a lot.
An awful lot.
L
The Fed doesn't need to physically print bills, regardless of denomination. Remember, they have legal authority over many areas of monetary policy, including increasing the money supply via these types of inter-bank transactions. The old way was to print money and hand it out; now they just make an electronic entry.
I'm not sure whether Mr Todd is in favor of this type of central banking power, since he seemed to rather enjoy tweaking your lack of knowledge in this area rather than debate the question of "is it good and/or right"?
Travis, the issuance of new Treasury/agency bonds increases the level of interest bearing federal debt. This is the fiscal (Keynesian) side of economic policy ie the "No Pork Left Behind" bill currently before Congress.
The Fed is charged with managing monetary policy via interest rates & money supply. The primary complaint with them is that an entire world economy is dependent on Bernanke & Co getting it just right between inflation & depression.
The secondary, more paranoid issue, is that the Fed and various broker/dealers and other financial institutions are engaged in self-dealing. For example, charges that Paulson engineered TARP I to help out his buddies and enrich himself.
The third complaint is that Bernanke is really pushing the Constitutional envelope in terms of what his powers are with regard to the 1913 Act. Right now, it seems like the politicians are simply clueless and are hoping he has all the answers.