04-08-2020, 10:13 AM
The Fed buys and sells debt, because debt is the underpinning of the modern monetary system.
As far as the Fed is concerned, debt is just a method of expanding the money supply and velocity of money through the economic system. Sovereign debt can be created and destroyed at will, depending upon inflation risk and employment statistics. It works fine unless there is a loss of confidence in the underlying monetary system.
As far as the Fed is concerned, debt is just a method of expanding the money supply and velocity of money through the economic system. Sovereign debt can be created and destroyed at will, depending upon inflation risk and employment statistics. It works fine unless there is a loss of confidence in the underlying monetary system.