[Toddsterpatriot]

This is a subject that gets somewhat complex; I apologize for assuming a certain level of audience knowledge about how the Fed and the Treasury works, and how dollars are (supposed to be) created.

Dollars are not created by Treasury auctions.

[theyreallthesame]

Please enlighten us all. How, then, are dollars created?

[Technogeeb]

Dollars are not created by Treasury auctions.

This can be true. It could be that such auctions might be purchased by Britain, or the Chinese, or from some large institutional fund or account whose manager would prefer to hold the bonds instead of previously obtained dollars. In these cases there is no creation of new dollars, simply the transfer of existing dollars back to the US (at the price of additional US debt).

One would hope that the need for M3 under such conditions would be even more obvious.