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To: rich evans who wrote (391207)	11/4/2010 12:25:49 PM
From: D. Long	Read Replies (1) \| Respond to of 794273

There the money sits so far. And the Fed can reverse this quickly. So there will be no debasement IMO There it sits "so far." Will it evaporate and save us from debasing the currency? It is printed money.

To: rich evans who wrote (391207)	11/4/2010 3:09:40 PM
From: Whitebeard	Respond to of 794273

i wish deflation was a problem. i sense inflation with food and other staples. also, all my city fees, garbage collection, sewer, are going up. being nickle and dimed to death.

To: rich evans who wrote (391207)	11/4/2010 3:27:39 PM
From: skinowski	Read Replies (1) \| Respond to of 794273

Fed is just putting deposits in the banks account who sell the Fed these bonds and notes. There the money sits so far. For as long as the money just sits there, OK. But even in this case I can't see how the Fed can reverse it so easily. What if banks will join in the inflationary expectations and start exchanging those dollars for other assets, in order to protect themselves? But the real big numbers, from what I understand, are in the interactions between the Fed and the Treasury. The latter needs to pay SS, Medicare, salaries, pensions, etc. Tax revenues are no place close to covering those expenses. Solution? Sell T-bills. Since there is not enough buyers, the Fed is becoming the main buyer. In order to purchase those bonds, the Fed literally creates money out of nothing. Once the Fed buys the bonds, it turns around and sells them to the banks (to whom it "lends" money for this purpose at almost no interest). The net result is that the newly created debt is hidden within the banking system. Banks, of course, enjoy the difference in the rates - and feel no pressure to issue any (risky) commercial loans. To bring it all back towards your point, recall that the "created" money passes through Treasury, and actually finds its way into the hands of individuals (salaries, pensions, SS, medicare, etc.) Therefore, the amount of "new" money entering the economy is increased -- "printing" does occur, and debasement is possible. They create money to cover deficit spending - and they spend it. Plus, whatever additional Helicopter manipulations the Fed does on top of that. It's not a pretty picture.