Treasury as Bill Anderson points out today, has no capital. The Fed is lending the Treasury the capital. Backing the loan is the taxing power of the U.S. government. This jumps the national debt by $250 billion for starters, although it may not be counted as such. If the Fed does not sterilize this by selling debt, the banks’ reserves will jump this enormous amount (and the monetary base of which it is a component.) The percentage increase in the base over the past 10 months is 14%, already highly inflationary. If this 250 billion goes into it without the … Continue reading Where does Treasury get the credits?