The US Treasury borrows from the Federal Reserve on assets that are added to the Federal Reserve balance sheet. And then the Treasury pays back the debt incrementally over the period of the loan (often on the order of 10-30 years). So it isn’t “literally printed”, it is borrowed at the Federal Reserve Prime Rate, which is typically less than the growth rate of accumulated tax receipts by year.
And those dollars borrowed from the Federal Reserve… where do they come from?
I think the point is that since these dollars are borrowed, they must eventually be repaid with interest, so on the long run, they will be removed from the economy and they don’t produce inflation like if it was free money. Now, if the government can just allow itself to get a greater amount of debt every few years and only pay the interest, it may lose its meaning…
And those dollars borrowed from the Federal Reserve… where do they come from?
The balance sheets of the Fed’s depositors.
I think the point is that since these dollars are borrowed, they must eventually be repaid with interest, so on the long run, they will be removed from the economy and they don’t produce inflation like if it was free money. Now, if the government can just allow itself to get a greater amount of debt every few years and only pay the interest, it may lose its meaning…