"The Fed has monetized more than half of the Treasury issuance during the pandemic with its bond purchases, which is distorting price signals and capital allocation." @WSJOpinion: wsj.com/articles/a-mad…
@WSJopinion Why is the Fed buying so many T bills (a highly untraditional and risky practice)? Because foreign buyers and financial institutions don't find our debt attractive enough. When you hear someone say "monetizing the federal debt by printing dollars out of thin air," this is it.
@WSJopinion Let that sink in: for every dollar of federal debt that the U.S. government is newly borrowing to pay its bills, 50 cents of that debt is being lent by printing more U.S. dollars. People call this "monetary inflation" but it's really a subtle form of default.
@WSJopinion The U.S. reduces the value of all the money it owes by reducing the value of its money.
The @WSJOpinion editors conclude: "What’s undeniable is that Washington is conducting one of the most radical fiscal and monetary experiments in peacetime history."
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