How To Spend $1.25 Trillion

http://www.futureofcapitalism.com/2010/08/how-to-spend-125-trillion

NPR's Planet Money program has a pretty good piece headlined "How To Spend $1.25 Trilllion." From the article:

In the end, they came very, very close to their target: They told us they were just 61 cents short. (In other words, they bought $1,249,999,999,999.39 worth of mortgage-backed bonds.)

The Fed was able to spend so much money so quickly because it has a unique power: It can create money out of thin air, whenever it decides to do so. So, Dzina explains, the mortgage team would decide to buy a bond, they'd push a button on the computer — "and voila, money is created."

The radio piece, which is worth listening to if you have the time and are interested in the Federal Reserve, refers to it as "magical."

by Ira Stoll  |  Aug 26, 2010 at 9:39 pm Related Topics:  Federal Reserve, Housing receive the latest by email: subscribe to the free futureofcapitalism.com mailing list