I have heard this before from other similar questionable sources. Does he mean that the Fed doesn’t print money and send it into the market, but rather uses it to buy up commercial or federal debt/paper?
Bonus: I also was confused by Bert Ely’s response. I guess Bert is saying that if more money goes into circulation people will just invest it in more treasuries??? How would that help exactly?
He means that although government is putting a lot of money into the system on the one hand, it is taking out a lot on the other. By selling treasury bills, the government takes money out of the economy.
But isn’t this ultimately inflationary when the T-bill matures and the government needs to pay the buyer back? They you have all the bailout money out there (unless the bailout is in the form of a loan that gets paid back) plus the interest from the T-bill?
Yup, you’re right about that one. But if the government wants to reduce inflation, they will continue to issue more and more T-bills. The Fed recently introduced some other deflationary policy equipment they can use (forget what it is, sorry). We live in really interesting times.
Got it. And obviously if no one buys the T-bills we are in trouble. I heard Peter Schiff mention something like the Fed is going to start introducing their own debt… this was mid-December and Peter was not even sure what the move’s ramifications are.