The Treasury prints money and then sells it the Fed at manufacturing cost.
How much would it cost the Treasury to print a $1.6 trillion bill? About 3 cents? So the Treasury prints a $1.6 trillion bill and instead of selling it to the Fed for 3 cents, it trades that $1.6 trillion dollar bill for the $1.6 trillion in debt that the Fed owns. That debt is then retired.
Instantly, the federal debt goes down by 10%. What’s the downside? If the U.S. has a ‘debt crisis’, isn’t this the easiest way to solve it?
