Ok ..I will bite on this one..WITH WHAT??????
We'll issue some new debt. China will buy it. :)
We'll issue some new debt. China will buy it. :)
With fiat that they create with an accounting entry.
The Federal Reserve is neither federal nor a reserve. It is a private bank that creates fiat currency at will.
Thats the beauty of going off a gold (or valuable anything) standard. Your currency floats relative to something else, which may or may not have real value at the level youve appraised it. Its no different than if you started making dalebert money at home. If you’re thinking ‘confidence scheme’ youre right on the money.
Right. They already have the printing presses working 24x7x365. How much more money can they print???
The Fed will buy long term US Treasury debt with newly minted Federal Reserve Notes. Actually, that's a metaphor. The Fed doesn't have to literally print the money. Instead it will just increase the balance of the US Treasury account at the Federal Reserve Bank.
The Treasury will instruct the Fed to create a long-term bond obligating the US Treasury to the Fed and the Fed will electronically increase the balance in the Treasury's account. It is literally as simple as that.
Then the US Treasury squanders the new money according to the designs of the President and Congress. What could possibly go wrong?
the proceeds from its huge mortgage-bond portfolio
I can think of two choices:
By how much less the dollars we saved and earn will be worth.
And/or by how much more taxes they'll be getting from us.