Bankerbob

To Monetize or Not to Monetize: Who Cares?

LJS, lets say,

Treasury sells $100 in newly created tbills, government recieves $100 in cash which it uses to fund programs...

Buyer purchases $100 in newly created tbills, buyer pays government $100 and holds tbills on balance sheet...

In this case no new money is created.

Now, if the Federal Reserve decides to get involved it "creates" $100 in new money and buys the tbills, either direct from Treasury or from the buyer.

In this case $100 in new money has been added to the financial system.

doesnt matter whether its book entry or not....... question is, does the Fed buy it or not.