This simply means that the fed buys Treasuries on what's called the secondary market which is the same market you and I can buy them on. This subjects transactions, in principle at least, to "price discovery" within a gigantic market. The alternative is the fed, i.e., the government, either buying bonds directly from the Treasury, i.e., from the government, or in the "primary market", i.e., from the Treasury at the Treasury's auctions, i.e., from the government. If the government buys and sells its own bonds directly from and to itself, commercial bank, reserve account balances will not be affected in the transaction. This would defeat a primary purpose of issuing bonds in the first place! I am confident even you will be able to understand this.
Your missing my point. What about the government making money outside of taxation and issuing bonds. Namely through its own business operations like patenting new technology or products that can be sold internationally as a free market enterprise.
1. Europe nationalized Companies post-WW2 and that worked out terribly. It wasted huge amounts of capital and resources and ending up making services and products more costly and with inferior results for the users than the private sector could provide. Countries had to create heavily subsidized national monopolies for these Nationalized Companies to even operate. In the end, National Companies throughout Europe ended up returning back to the private sector after great turmoil and expense. You routinely ignore this sound and well established economic reality in your ramblings. 2. Government research centers in the US like National Labs can and do license technologies to the private sector. This works in a limited scope and capacity because US National Labs have certain equipment and technology centers simply not available in the private sector. Byproducts from materials and weapons and fusion research comes to mind. Robotics and remote technologies designed and hardened for highly radioactive environments comes to mind. But as we've seen with commercial space ventures, US Companies like SpaceX, Rocket Lab, Maxar, Planet, Spire and Swarm are now worth Trillions of dollars and they have supplanted NASA (a noteworthy Government Agency that once had a World leading nationalized technology monopoly) for vehicle launches and orbit vehicles (satellites). Even the CIA and the US military contracts with these Companies. Why? Because NASA wants $XXXXXXXXX to launch your orbital vehicle and SpaceX wants $XXXXXXXX to launch your orbital vehicle. Governments don't innovate anything. A motivated private sector innovates. The Soviet Union had millions of University trained Engineers and Scientists. Literally. They invented the streetlight, the satellite, the laser and the modern computer. And Commercially they didn't do anything with it. And they still felt compelled to undertake industrial espionage on a massive scale in the West. Here's the point: if you value innovation, you don't want the Engineer whose goal in life is to write the specifications to build a fence around a waste settling pond. You want the Engineer who dreams of getting bloody rich by developing a cell phone battery that can be charged, discharged, and recharged ten thousand times. Technology creators and developers require an extensive University research system and an infrastructure path that financially incentivizes Engineers and Scientists. Why does almost everything we touch and do rely upon technology developed in Silicon Valley, California? Because they've found a way to transform clever Engineers and genius Scientists into freaking Billionaires. Silicon Valley has a career path for that. The most innovative private sectors are the ones that encourage risk taking and capital investment in early and new technologies.
There is a massive area you are missing, which is the process of regulating and authorising that the government has control of and I don't just mean on a domestic level. There are certain things that can only be developed with at least government approval if not government involvement. For example, the internet when it was first put out for use required a whole new legal framework and a whole new development platform to deliver it. In the UK the British government made £3 billion from the development of 3G technology and then there is the licensing process for using it etc. This is the same for the development of any new product or new technology. Say for example you want to develop a new banking product. You can't just do this you have to get governmental approval on the new product to be able to develop it and then get it to the market, then you have to have a regulatory body set up to monitor and enforce illegal activity on it. This is in part where the opportunity lies with the government, the first part is to be involved in the development process and patenting process of the new product. Then to be involved in commission for its use and licensing by a regulatory body. There is an opportunity to be involved in the new product development process and to take a cut of the profits domestically and internationally too. This is the next aspect of why governments are so important, they can set up regulatory bodies and legal frameworks which can be franchised around the world. Private corporations cannot do this and they also don't have the same ability to enforce payment and chase up infringements of product use. Government involvement in new product development is essential and be commercialised globally. You can only tax your own nation but you can trade with the whole world.
This flies in the face of everything we know about economics and market innovation - you are advocating for a kleptocracy. Putin's Russia - that's your framework. Great. So a government erects a multitude of regulatory impediments in exchange for a royalty and the issuance of a patent. And this is above and beyond what VAT, income, and myriad of other taxes the government already collects. The UK government doesn't innovate anything. The UK government doesn't create anything. This is how you come to live under a government whose structure is so odious and overbearing that the OECD counts the shadow economy in the trillions (the EU). This is just like you. There are four million people on the NHS wait list for surgeries, 2.4 million people on the NHS wait list for cancer treatment - and you want the UK government to be intimately involved in the development of every commercial product in the UK in exchange for a royalty and the issuance of a patent. You would kill off what's left of every manufacturing and software and tech company that's left in the UK. You would have a product development cycle stifled and completely beholden to a government bureaucracy. A common theme throughout your tedious screeds is the fatal flaw of believing that a government entity can move at the speed and efficiency of the private sector, and that a government entity is entitled to dictate to the private sector what services and products they are allowed to bring to market and to offer them legal protection for their intellectual property only in exchange for a royalty in addition to taxation. Yeah, mafiosi or kleptocracy. You are simply absurd in your reasoning and your complete lack of qualified economics training is apparent.
So when did you stop beating your wife? Sorry, but I don't know how better to illustrate the ridiculousness of inferring something is true that isn't -- you beat your wife, by asking a loaded question.
The technique of governmental innovation has proven effective in the past in the UK with 3G and many other products that have patents on them. This is the other aspect you are not appreciating, the patents that go into making a new product for a new or old market and how they can be commercially valuable on the international market to produce a variety of different products. Making a breakthrough on one product's development can lead to a revolution in design, manufacturing and material advancement. This area of innovation is something governments can be involved in and often need to be involved in to legitimise, regulate and provide a working framework for them to operate in. I feel you are assuming that the government is acting like a company making the product and marketing it itself. No the government merely helps the process of either developing a new design or patenting or enforcing infringements or developing a regulatory body or legal and operating framework to enable the new product to operate legally and internationally. The company does all of the work, it manufactures the product, it makes the breakthroughs, it deals with getting sales, it deals with staff relations, productions plants and storage in warehouses. The government is the business partner in the legal aspect of new product development getting the patents in place domestically and internationally, getting the product legitimised domestically and internationally for use, getting the regulatory body set up, setting a legal and operating framework to enable the products use and franchising the use of the products to either private companies or other nations. The government gets a percentage cut of the profits the free market enterprise or other governments make for using the product it helped to develop. The government that was involved in the new product development process and becomes a business partner with the free market enterprises playing the part of legitimisation, regulatory supervision, operating framework and enforcement. You seem to think I am trying to get the government to make the products themselves, I'm not. I am trying to get the government involved in the process of enabling new products and helping to develop the products to market and getting a cut of the profits for doing it. Offering to pay the cost of patenting for new breakthroughs and sharing the royalties, launching new banking products that banks can use and operate for a license fee and franchising new tools. Another way of seeing it is the government is selling innovation or the ability to enable innovation, not the product itself, not even the tools to manufacture it, not even the products service. Simply the breakthrough. The formula that makes something more efficient, the new design that makes something last longer, the new technique to manufacture something better or stronger, the new metal alloy mixed whatever. But most importantly of all, the government is becoming the business partner in the process of getting the new innovation legitimised and to market. Some of these breakthroughs are in governmental processes which can make savings of billions of pounds every year. Other governments can receive these cost efficiencies if they use the same breakthrough techniques the innovating government has developed. These processes are marketable and can optimise.
The basic concept is simple. The government can put a new process in to practice say for example developing a new pension product that changes the way people pay into their pensions, which optimises how the government pays tax relief on pension contributions. If the government can postpone paying pension tax relief contributions the government does not have to borrow as much money in the short term so it pays less debt interest in the time it delays its pension tax relief payments. This saves the government money on the debt interest it avoids through deferring borrowing. The new pension product which the government owns the rights to and allows pension providers to operate is marketable to other nations, who can then make the same treasury cost efficiencies through deferring their pension tax relief contribution payments. This is something they have been doing in the United Kingdom and can sell to other countries, which then get the advantages the British get from their new pension product. Here is another one and one they have been using a lot. Pension Pumping the technique that I developed cuts the annual pension contribution payment to postpone the pension tax relief payment the government makes, this saves money on interest the loans that would have been borrowed to pay the tax relief with by reducing the size of the payment and deferring it to a later date. It also pumps money into the economy by reducing the pension contribution which stimulates economic growth. As long as the reduced pension contribution can be made up for at a later date it won't cost anything but the government's debt interest costs have fallen dramatically. The key is to develop new pension products other countries can use that takes advantage of this. I have linked to an article below that explains it. http://morganisteconomics.blogspot.com/2020/04/pension-saving-as-economic-control-tool.html Can you see that to develop products like this only the government can do it. But it literally saves the economy billions of pounds every year in reduced government debt interest costs by deferring paying the pension tax relief payments. Pension Pumping also helps to stimulate economic growth by preventing high pension contributions during deflationary periods and has helped to sustain economic growth in the United Kingdom since using the economic targets have been achieved and unemployment fell sharply. I don't understand why you can't see how this ability to make the every Treasury in the world more efficient by optimising the pension saving process, which can save billions of pound every year is not a great product and it is only a government that can really do it. My appreciation of the cost efficiencies pension saving control has on the economy is the breakthrough that can be used to save billions globally annual and sustain economic growth. I put forward a process and formula in two articles below. http://morganisteconomics.blogspot.com/2019/03/optimal-pension-saving.html http://morganisteconomics.blogspot.com/2020/02/optimal-pension-saving-can-be-taken_8.html
At some point in time, you'll have to cite a reference other than yourself. And this isn't a discussion or an intellectual exercise, you cite no formal proofs or academic works. Let me provide an example: "The Biggest Auction Ever: The Sale of the British 3G Telecom Licenses". The Economic Journal, February, 2002. P. Klemperer, U. of Oxford, K. Binmore, U. of Bristol. The British Government collected funds on the sale of licenses, not for intellectual property rights developed and owned by the British Government.