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Politics : The Obama - Clinton Disaster
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To: DuckTapeSunroof who wrote (8604)3/6/2009 11:43:46 PM
From: Wayners  Read Replies (1) of 103300
 
I know the answer to my question. When loans that the Federal Reserve makes, such as when the Treasury borrows money from the Fed, e.g. exchanges bills, notes and bonds for Federal Reserve Notes, the interest payments the Treasury makes to the Fed are revenue to the Fed and payments of principal, those dollars go out of circulation, and since the Fed can't just spend money or keep the money it prints, essentially the money is retired inside the Fed, until the Fed makes a new loan.
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