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re: Fed balance sheet - a question
Posted on 8/17/10 at 3:04 pm to LSURussian
Posted on 8/17/10 at 3:04 pm to LSURussian
quote:
Think about what you're saying: the dollar is backed by dollars. That is really what you're saying.
The dollar is backed by promises to pay a debt in dollars. Yes.
quote:
U.S. government debt issued by the Treasury Department are dollar investments which pay interest. If the Fed buys government debt, they are buying dollar instruments.
Those instruments don't "back" the dollar. They are dollars. If it was the way you think it is, it would be one giant circle revolving off into infinity.......and beyond!
How "are" they dollars? The dollar bill in my pocket doesn't pay interest. What about all the things the fed buys that aren't treasuries?
quote:If the fed doesn't issue dollars in exchange for all the mortgage debt they are buying, what do they issue? Lollipops?
You really need to read up on how the Fed works.
Posted on 8/17/10 at 3:34 pm to RaysGoodLiquor
I can explain it to you, but I can't understand it for you.
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