Re:Fed likely to keep raising rates
by credit_guy on Thursday October 11, 2018 @10:37PM
(#18198707)
Huh? Who is paying that interest? To whom?
[ Parent
| on HN ]
Anyone who buys Treasury bills is paying that interest to the Fed. So banks, pension funds, social security, etc.
The Fed’s debt is made up of (other) Treasury bills which it purchased during QE using “printed” money.
If this makes your head spin, then you’ve probably understood it correctly.
So are you saying that if the Fed prints $x money, it gets back $x money + interest. It is using the interest to pay back the $x money... and then in theory it erases it from its balance sheet. What does it do with the excess money it collects?
The excess goes to the Treasury. https://www.nytimes.com/2018/01/10/business/fed-profits-trea...
Re:Fed likely to keep raising rates
by credit_guy on Saturday October 13, 2018 @12:41AM
(#18206462)
Wait, if you buy a Treasury bill, you pay interest, rather than receive? Doesn”t sound right.
Re:Fed likely to keep raising rates
by justsayinstuff on Thursday October 11, 2018 @10:45PM
(#18198746)
Maybe I misunderstand something here, but the debt is of the US govt to the Fed. Rising interest that the Fed collects is the Fed's not the US govt's... That's like asking Citibank to allocate the interest it collected on me to my credit card balance...
No, the debt I’m talking about is the Fed’s own. They leant fictitious money to themselves (quantitive easing). It’s included in the public debt, but it’s not a literal debt of the U.S. government, which a is separate, massive debt.