#How the Fed is Responsible for Consistent Monetary Inflation and Credit Expansion You may have heard… our country is broke. Our current national debt is over 15 trillion dollars. That number is astronomically high, to the point where it is even hard to conceptualize it, let alone how to pay it back. You may ask yourself, how in the hell did the debt every reach such a level? Well, in the next 300 words I will explain how governments can spend more money then they take in and how new money makes its way into the economy.
For example, let’s say Congress decides it needs five new Blackhawk helicopters, which cost 1 billion dollars. Having already spent its budget Congress decides to take out a loan. So, it creates 1 billion dollars worth in Treasury Bills, or Notes, or Bonds depending on its desired duration. Private investors buy some of these Bills up, but the Fed through its “open market” activities purchase the majority. The Fed writes a check to Congress for 1 billion dollars. Where did this mone