The Fed no longer “monetizes debt”

It is scary to think that we might go through hyperinflation because the “Feb is monetizing debt”.  Except that it isn’t, and hasn’t been able to monetize the debt since the gold standard days.  So if you are worried about hyperinflation – stop.  This excerpt from another fine article from pragcap.com helps explain how an old process turned into a current myth:

When the US government was working under the gold standard the US Treasury would literally print up certificates to purchase gold from the gold mines.  These gold bars would be delivered to the government and the Treasury would issue a check to the miner.  This new money would end up at the Federal Reserve Bank in the form of deposits.  This would naturally increase the money supply.   An increase in the money supply is scary for obvious reasons.   So, the term debt monetization has its origins in the days of the gold standard, but persists to this day despite the fact that we are no longer on a gold standard.  Not surprisingly, the term is still used today despite the fact that the US government can’t monetize its debt via Fed purchases

You can read the entire article here.

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