You misunderstand. Those "trillions of dollars" you mention were created earlier via deficit spending into the private sector economy when the Fed covered net Treasury overdrafts in the Treasury's Reserve Account. Otherwise the The Private Sector could not have bought trillions of dollars worth of assets in the first place. All money originates with the Federal Government, and makes its first appearance in the private Sector Economy via Treasury spending.. If the Government were to tax back out of the economy as much as it spent into the economy there would be nothing left in the private sector economy for savings and investment. There must be deficits. The Governments net money creation step occurs when the government deficit spends and the Federal Reserve covers a net Treasury overdraft. The amount of the net overdraft covered is the deficit. Usually the Treasury spends on goods and services, that it needs to operate, but of course it could spend on appreciating assets as well -- it could buy Greenland if only the Dames would cooperate! -- and an Asset like Greenland, it could presumably later sell. It is the net Treasury Reserve Account deficit covered by the Fed that we erroneously call "the National Debt," even though the money created to cover the deficit is not owed to anyone, because it was, in effect, "created out of thin air" as we like to say. Although there is a deficit, there really is no such thing as a real national debt. The money the fed paid for the securities during the banking crisis could have been "created out of thin air" by the Fed. It is, sad to say, more abstract than I care to get into with you right now to explain to you why, when the Fed creates money to buy non wasting assets, such as securities, that are later sold and may produce income in the meantime, there is, generally speaking, no net increase in the deficit, and therefore in the amount of net outside money created and spent into the economy. In fact, these Fed purchases can result in a net decrease in the deficit. As a general rule, the only net creation of money, and therefore a net increase in the amount of outside money spent into the economy, occurs when at the end of the accounting period the Fed has covered a net overdraft in the Treasury's Reserve Account. It is perfectly understandable that you should be confused by the result of consolidated Treasury-Fed transactions as they appear, when viewed in isolation from each another, to be something very different than what they actually are.* There are by now reams of excellent material available to you if you care to make a study of these transactions. You could start with Kelton's book, as it requires the least knowledge of economics of all the books and blogs that are out there. You're probably wondering why, if I am right, all these others, such as yourself, could possibly be so wrong. I wonder the same thing. I have always thought it was because it is so difficult for us to wrap our brain around financial transactions that start with printing rather than borrowing. To her credit, Kelton is the first , so far as I'm aware, to delve into specific reasons for the misunderstandings, beyond our obvious difficulty grasping transactions that do not in anyway reflect our personal finances. . So even though her new book is short on Fed-Treasury operational detail, she does a nice job of dumbing things down to their essence. Read Kelton. Then get back to us. ___________________ *Sorry to say that your bull headed insistence, despite all evidence to the contrary, that the Federal Reserve Branch Banks, and therefore the Federal Reserve itself, is a privately held, for profit institution will make it virtually impossible for you to ever correctly grasp these somewhat complex transactions. It is the crediting of all Fed profits reduced by Fed expenses to the Treasury's Reserve Account that requires that government money transactions be viewed as consolidated Treasury-Fed operations before their aggregate effect can be understood.
100 percent complete bullshit... you fucking lying idiot.. .. The opposite of reality. Your most ignorant lie ever" Piezoe said "All money originates with the Federal Government" All money does not originate with the Federal govt you lying moron. Even you local bank is allowed to create money. Its call Fractional Reserve Banking...you fucking lying idiot. They have their Reserve amount and then they can lend out lets say 7 times more. That is millions of dollars being created by your local bank ... you fucking lying idiot. (sometimes it does not get paid back... so you can drop your next lie argument about it being destroyed upon return.)
You fucking ignorant... lying... bullshitting idiot... piezoe. The first link... is below... You claim to be a scientist... you know nothing about law or real world economics... your banking sources are propaganda. you need to bring critical thinking skills to your talking points...because they are designed for the lefty sheeple. Not people who can think and research. People learn about the velocity of money and fractional reserve banking in econ 101... you missed... it because you were in science classes. (which is fine... but stay in your lane.) you are a ignorant... lying moron... and this proves you are just making shit up as you go along. Most of the money in our economy is created by banks, in the form of bank deposits – the numbers that appear in your account. Banks create new money whenever they make loans. ... Banks can create money through the accounting they use when they make loans. How Banks Create Money - Positive Money
All money originates with the federal government . This is what's called outside money. Fractional reserve banking creates temporary money. Credit money is "inside" money. Inside money can't exist until outside money is created and spent into the economy.
This is true. This is "inside money," and it is normally the main component of the the money supply. Don't lose sight of this inside, or "credit" money being temporary, as it disappears when a loan is paid off. The Fed, despite its attempts to influence demand for credit via interest rates, is relative powerless to do so, except at extremes. I recommend you watch the excellent video -- all parts of it -- you posted a hyper link to in your post #4 above. If you watched it, you did not attention. As I said, you can lead a horse to water, but you can't make them drink.
Please be advised there is at least one part of the otherwise excellent video to which you gave a link to above that is incomplete and misleading. It is the section on the National Debt of Great Britain. What is presented is conventional wisdom. That is to say, the picture is one of the Government needing more money and therefore going out and borrowing it in the case of deficit spending. This is certainly what the Government appears to be doing. I have no direct knowledge of Bank of England-Exchequer operations other than those presented in this video, but I am quite confident these operations will be little different in substance than those of the Treasury and Central Bank in the U.S. What happens when the U.S. Government spends in deficit is VERY different from the picture presented in the video of deficit spending in the UK. This picture must certainly be incorrect, though it certainly correctly describes what appears to be going on. It is impossible for the U.S. to collect all the money it spends BEFORE it spends it by either taxing or borrowing. I'm sure this is equally true in Great Britain. I can only describe in some detail what happens in the U.S., but rest assured the process is likely very similar in the UK. When the U.S. Treasury spends, it does so without regard to receipts. Any overdraft in the Treasury's reserve account is automatically covered by the Central Bank. At the end of the accounting period any net overdraft represents new money created out of thin air by the Central Bank and is equal to the penny what is termed the deficit. This is in fact and reality the money creation step used by the government to create what MMT economists call new "outside money." The aggregate sum of all these deficits is what we call "The National Debt". However, as this "debt" is simply money created out of thin air it isn't owed to anyone! There is no National debt in anything like the conventional meaning of that word! Later, after the Treasury has spent in deficit into the economy, the Treasury will issue Securities that they auction off to primary dealers. This operation is NOT borrowing though we call it that. It is the exchanging of outside money already spent into the economy for a Treasury issued Security. After this Transaction the Private sector has a bond and the Treasury gets back the new money the Fed previously created in Treasuries Reserve Account when it covered the Treasury's overdraft. The Treasury always Money finances its spending. It is only later that it appears to borrow. Though I know relatively little about UK money operations, I am quite confident what happens there will mirror what happens in the U.S. The picture presented of treasury spending and borrowing in the otherwise excellent video on UK Banking practice is the conventional one that most economists and bankers believe is correct. But it is also a misleading and incorrect picture in very substantive and key ways.
But you are not providing water...you are providing cow urine and bull shit. Then you mix in irrelevant truth to hide your displayed ignorance.