National debt is not demand debt. It's not a mortgage where you go to a bank and borrow new money at a lower rate to pay off an old loan at a higher rate. In order to retire debt you have to buy it on the open market, and the debt you will be retiring will be selling at a premium. So for every $1 trillion in debt you retire you will probably be paying $1.1 or $1.2 trillion to get it. And good luck getting anyone to buy debt with the negative rate you quoted.
The Federal Reserve will then pay the United States Treasury $3.25 Trillion per year.
No, the federal government will pay the treasury $3.25 trillion per year. The Fed acts as the agent for the treasury but the debt is serviced through tax revenue.
No, the federal government will pay the treasury $3.25 trillion per year. The Fed acts as the agent for the treasury but the debt is serviced through tax revenue.
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The Fed does, however, pay any profits it earns back to the Treasury Dept. Since 2008 it’s remitted somewhere around $700 billion in profits. Overtime this mitigates the cost of interest payment on bonds and maturing bonds.
> “ And good luck getting anyone to buy debt with the negative rate you quoted.”
You haven’t been paying attention.
It started in the Obama Administration.
The Federal Reserve is the buyer of US Debt,
Directly.
No open market needed.
When it started, there was a big headline which quickly faded.
Around the same time, the M3 index was buried.