You wouldn’t know it from the press reports of Bernanke’s speech to world monetary leaders on Friday in Jackson Hole. Filtered through the euphemisms of the Fed, it will be “buying more securities” or “expanding its balance sheet”. But the money to do this comes from the Treasury’s printing presses! The process is really two simple steps to disguise the actual creation of the money. First, the Treasury sells government bonds for money from investors which the government can spend, then the Fed buys back bonds using money created by the Treasury.
Ironically, they’ll try anything except what would actually work: reducing government spending, and cutting the tax rates instead of raising them! This would leave money in the hands of those who would really spend it to stimulate the economy, the taxpayers who earned it in the first place! DSMW