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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (391261)	11/4/2010 4:09:55 PM
From: skinowski	Respond to of 794292

But the QE which the Fed did and is now doing again is to buy the Bonds ftrom the Primary Dealers/Banks not the treasury As the Fed makes those purchases, does it "create" money? Also, once the transaction occurs, the money belongs to the bank, regardless of where it is deposited. My understanding is that the purpose of the "QE" is to add liquidity to the system - if all it does is create some dead money, then why bother? I couldn't find the data that I saw some time ago, showing how much new money the Treasury needs to raise to meet its ongoing needs (and to compensate for tax revenue shortage). As I recall, it is a very considerable portion of the entire budget. That's a massive amount of money that goes to recipients and enters the system on an ongoing basis. it's all basically created, and it's masquerading as debt - which no one expects to be paid.