Edges Wrote:
Sep 02, 2012 2:09 PM
The FED lends the money to the US Government. The US Government packages this into a "treasury bill" and sells it to a bank, promising a certain amount of interest. The FED then buys the treasury bill from the bank. So, the FED creates money out of thin air, lends the money to the government, and then buys it back with interest. Q3 is a great idea - for the FED!