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So that say the government says we need $3 trillion in circulation does BEP or the federal reserve just say okay here is $3 trillion bills free money or do they say here is $3 trillion dollars but you have pay debt of money for the $3 trillion I’m printing for you?
Paper currency is unrelated to the debt it represents. Paper currency is just a way to store debt, like any other asset. So if lots of people suddenly want to withdraw money from the bank to stuff in their mattress for a rainy day, that has nothing to do with the overall amount of debt in the system, but the government may need to print more paper money so people can store that value in the form of paper.
So as regards your question, printing FRNs as dollar bills is neither free money nor debt. It simply represents the value of an asset you liquidate, eitehr a bank account or an investment or an asset that is sold. FRNS aren't free money and they don't increase the debt.
FWIW, the government is always destroying paper money as it ages, so much of the printing is simply replacing old stock. Every time a bill is replaced with a new design, they have to print the entire equivalent value of the old design they collect to destroy. It is neither new money nor new debt.
Maybe your question is one of detail, such as, how does Bank of America order a million dollars in cash FRN dollars from the Federal Reserve in order to stock all of its ATMs, for example. I don't know that answer. I would assume that B of A purchases the FRN dollars from the Fed with a million dollar electronic transfer adn then receives a million in paper bills.
So if there was tornado that cost million dollars and the government had no money the government would sell bonds or the treasury and the federal reserve will buy it. And there will be debt on this bond or treasury?
So if there was tornado that cost million dollars and the government had no money the government would sell bonds or the treasury and the federal reserve will buy it. And there will be debt on this bond or treasury?
That is not how QE works. The government has to fund the damage using budgets set aside and approved by the President and Congress. That will be distributed through FEMA. This is why it takes a long time to get these budgets approved because congress and the POTUS don't get things done that quickly. Once the budget is approved then the treasury will send the money and it goes on as debt on a spreadsheet. The Treasury has to then issue bond and sold on the treasury market. The Federal Reserve comes in when there are too much treasuries that aren't bought up on the market. Since the yield curve keeps going up, reflecting a very bad treasury market as foreigners are not interested in loading up if the interest rate is higher than what the yield is paying.
That is not how QE works. The government has to fund the damage using budgets set aside and approved by the President and Congress. That will be distributed through FEMA. This is why it takes a long time to get these budgets approved because congress and the POTUS don't get things done that quickly. Once the budget is approved then the treasury will send the money and it goes on as debt on a spreadsheet. The Treasury has to then issue bond and sold on the treasury market. The Federal Reserve comes in when there are too much treasuries that aren't bought up on the market. Since the yield curve keeps going up, reflecting a very bad treasury market as foreigners are not interested in loading up if the interest rate is higher than what the yield is paying.
It all could happen quickly if the political powers that be deem that time is of the essence. A very interesting book describes how we funded much of the early part of our WW2 War effort:
Essentially, thousands of US banks made loans on a very accelerated and secretive basis. All guaranteed by the Fed. Much of this had to be classified, since we did not want our enemies to correctly gauge our efforts.
At the time, few understood the power of our fiat. We needed next to no gold to fund the War effort, and no foreign money nor investors. Today the Fed could conceivably do all this in quick time. This is one very major reason that we need to preserve the Fed. A future War could cost a whole lot more USD's than we all possess. Yet those USD's would not be our limiting factor. As in WW2 our limits would be in productivity.
It all could happen quickly if the political powers that be deem that time is of the essence. A very interesting book describes how we funded much of the early part of our WW2 War effort:
Essentially, thousands of US banks made loans on a very accelerated and secretive basis. All guaranteed by the Fed. Much of this had to be classified, since we did not want our enemies to correctly gauge our efforts.
At the time, few understood the power of our fiat. We needed next to no gold to fund the War effort, and no foreign money nor investors. Today the Fed could conceivably do all this in quick time. This is one very major reason that we need to preserve the Fed. A future War could cost a whole lot more USD's than we all possess. Yet those USD's would not be our limiting factor. As in WW2 our limits would be in productivity.
Ultimately this lead to the creation of the Central Bank. And why we have to move the dollar off the gold standard because we simply can't keep up with the purchasing and storage of gold with the amount of fiat we have to print.
Now with many of our allies and enemies creating an alternative financial bloc to shield against sanctions and other us monetary controls. Ultimately we may have another trade war or embargo against several countries for choosing to back other currencies. America is waiting for Latin American countries to replace China and that's not going to happen anytime soon.
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