I posted this elsewhere but thought this might be a place for one of the many brilliant FReepers to weigh in.
So what I’ve been trying to figure out in my pea brain is this:
What good does it do the Federal Reserve, a private corporation, to print money and thus make the money they have and trade in worth less?
What good does it do them to have 5 Trillion dollars worth of debt that is becoming worth less and more prone to default every day?
I could print money, you could print money but it isn’t worth anything. You can print more stock but eventually it becomes worthless and your share holders lose confidence. In the long run making your stock worth less makes it worthless.
So what is in this for the Fed? What am I missing?
Inflated money makes debt disappear. There’s a LOT of debt.
Interest.
My (flawed) understanding:
The Fed is the only business allowed to write a random number in their balance sheet. The guy in charge writes "$1,000,000,000,000" in the Assets column, and "-$1,000,000,000,000" in the Liabilities column. It all adds up to $0, you see. They then loan out that vast new asset, and charge interest on that loan. Oh, sure, the interest rate is something absolutely pathetic like 1% ... but one percent of one trillion dollars is a cool ten billion dollars. The trillion-dollar loan eventually gets repaid*, the trillion-dollar liability gets erased, the "$1,000,000,000,000" in the Assets column and "-$1,000,000,000,000" in the Liabilities column vanish into $0 sum, and the business enjoys its nifty new $10,000,000,000 profit. Not bad a few seconds of writing and a little interim bookkeeping.
(* - meh, at that kind of interest income for that size a loan, nobody cares if it's never paid back so long as the interest payments keep rolling in.)