Quote from: thaaanos on March 31, 2014, 03:12:35 PM

Quote from: bobdutica on March 31, 2014, 02:10:30 PM

Quote from: lnternet on March 31, 2014, 02:05:47 PM

Quote from: AlexGR on March 31, 2014, 01:49:04 PM

When we say the govt is printing money, we are not really talking about the paper notes in circulation, rather electronic money (digits in a computer screen) that exists in bank accounts.

Yes, of course. They are not doing that either though.

an excerpt from some quick google search result:

Quote

When the Fed creates $85 billion, it uses this money to buy bonds - typically split 50/50 between US Treasuries and Mortgage Backed Securities (MBS). Here is what's important: When the Fed creates and gives $85 billion in reserves to its member banks, it removes $85 billion worth of assets (bonds) from the balance sheets of those same member banks. The result is that no new net financial assets enter the economy.

That's true, as far as it goes. But the Fed also buys Bonds directly from the Federal Government, and that creates new money.

and Debt

Is is safe to assume that the US Gov sucks up overflowing debt this way? I wonder if US Gov can go bankrupt, or is it like a debt black hole and can go infinitly indebted?

The only way the US goes bankrupt is when bond holders of US Treasuries has to be paid and they refuse USD as payment. Unlikely to happen. If this happens probably war breaks out.