[A primer on how the inflation tax works.] “Turning a profit for the Treasury Department is certainly not the Fed’s main goal, but it can’t hurt. So how exactly is the Fed making [the Treasury] money? First, here’s an important distinction: When the Fed buys bonds, it’s not spending the government’s cash. Rather it creates the money itself, basically by electronically crediting the money to banks. The Fed then earns interest on the Treasuries it holds, and while interest rates are very low, the sheer mass of bonds the Fed holds nevertheless makes for quite a windfall.”
http://economy.money.cnn.com/2012/09/01/how-fed-stimulus-earns-a-profit-for-taxpayers/
Related posts:
U.S. promises to phase out landmines that target people
This Bizarre Russian ATM Wants to Lend You Money
The daily smart pill that can remember all your passwords
Minneapolis cop who allegedly had sex with underage girls is jailed
Hong Kong Mercantile Exchange closes its doors; investors compensated in cash
Never Mind $35, The World's Cheapest Oil Is Already Close to $20
Assistant U.S. attorney's Facebook posts probed
U.S. officials fuming over Hersh account of Osama bin Laden raid
World’s longest bullet train service launched in China
E-ppointments
Two biggest Cyprus banks limit ATM withdrawals to reduce bank runs
U.S. has lost sight of $70 billion in cash sent to Afghanistan [2011]
In Gold’s Own Country
China Considers Ending Birth Limits as Soon as This Year
The student loan bubble is starting to burst