Toddsterpatriot
Diamond Member
I just told you how it works, Toddster.
It's a revolving circle of IOUs.
And you know that. Quit playing dumb.
When the Fed opens up its ''checkbook'' it's writing a check which is drawn on an account that has nothing in it. Here the Fed is committing Fraud.
To repeat. Empty suit politicians say ''hey, vote for me because I'll make sure that the government provides you with more free stuff than my opponent say's he will.''
The politicians then vote for the country to spend more than its income.
This is called ''deficit spending.''
The Treasury then issues IOU bonds. Which are the nation's debt.
The banks then buys those IOU bonds with ''currency''...which is not money. It's a claim check on an IOU. Again, ''money'' has to be a store of value and a defined unit of account, unlike your Federal Reserve Note which, again, is just a claim check on an IOU.
The Federal Reserve then writes IOU checks and hands them to the banks in exchange for the Treasury's IOU Bonds. These ''checks' are drawn on an account that has nothing in it.
Thus more ''currency'' is created.
Again, what is hapening here is that the Federal Reserve and the Treasury are just swapping IOUs using the banks as middle men and ''currency'' (more, IOUs) magically comes into existence out of thin air.
This process repeats over and over and over and over and over again, enriching the banks and indebting the public by raising the national debt.
The end result is that there is a build-up of bond at the Federal Reserve and 'currency' at the Treasury.
This process is where all paper ''currency'' comes from.
The Federal Reserve and the government incorrectly call it ''base money'' because they (like you, Toddster) don't know the difference between ''money'' and ''currency.''
It's correctly called ''base currency'' because it is not ''money.'' It is ''currency.''
As usual, you're clearly not interested in functional discussion. At least when it comes to this particular topic of debate anyway. And I get it. I understand your reasoning. Your livelihood depends on the people being ignorant to the function. Open market operations is what you do, right?
I just told you how it works, Toddster.
It's a revolving circle of IOUs.
That's awful!!
But what does the Fed do with the currency they get?
They don't need it to buy bonds, they have a magic checking account.
Let's us some real numbers.
The Fed buys $100,000,000 in one year T-Bills and in one year, the US Treasury
pays off the $100,000,000 of debt and gives the Fed $104,000,000.
What does the Fed do with the $104,000,000?