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?
thanks for explaining that to me...
“The Treasury will instruct the Fed to create a long-term bond obligating the US Treasury to the Fed...”
Nonsense. Congress sets the debt limit and instructs the Treasury to sell bonds to raise the money it authorizes. The Fed isn’t involved in that process, and the Fed can’t “obligate” anyone.