Kimura
VIP Member
Sometimes the Fed goes long periods without injecting liquidity.
Think of it this way: tax payments and bond sales lead to monetary destruction. In a similar fashion, for example, your loan repayments will destroy bank deposits.
Think of it this way, the government isn't allowed to print money to pay for spending.
Currently.
Which is fine....
However, these institutional arrangements and constraints don't change the balance sheets, the end result of our fiscal policy so to speak, only the order we're talking about. Either way, at the end of the day, the Treasury receives goods and services in exchange for currency from teh FED.
^^^^^
Think it this way.
Treasury spending always involves monetary creation as private bank accounts are credited, while taxation involves monetary destruction as bank accounts are debited