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I don't understand how the US Treasury, and the Federal Reserve can function as separate entities. I don't understand how the Federal Reserve wouldn't eventually default on the loan payments it provides to banks, unless it acquired money somehow, through taxes or by printing money to pay for things.
I think my misunderstanding has something to do with my misunderstanding of treasury bonds. I think how it works is that the Federal Reserve issues treasury bonds at auction to pay for the debt payments it owes to banks. Is this correct?
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>>1655210
Feds privately owned and banks can loan like 20 bucks for every dollar in savings.
We fucked m8
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>>1655250
Unless the ratio the banks can loan increases every year I don't see how that lets them pay for things.
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>>1655267
Actually never mind, that's the rule for non central banks. That doesn't effect how the central banks pays it's debts.
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>>1655210
Check this series out.
https://www.youtube.com/playlist?list=PLE88E9ICdipidHkTehs1VbFzgwrq1jkUJ
The Hidden Secrets of Money.
Episode 4 will clarify everything for you.
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>>1655210
>Fed default
The fed can't default. It doesn't owe banks money. The banks keep money in excess of required reserves and they pay a slight interest of 0.5%. The fed could stop paying any time. And the banks are paying ten times the interest to the fed than it gives out for bonds.
No, the fed sells treasury bonds to banks. Banks pay for these with bank reserves. The interest paid on the bonds comes from the government. That's where government debt comes from.
>>1655250
No, it's 9 bucks for every 1 in reserve.
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