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Comment by rmah | Hacker News Reader

Direct payments to consumers is a 100% loss on those funds. Buying Walmart (or other corporate debt) means the Fed gets the money back when those firms pay down that debt. So very very different.

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No, that's incorrect. It's not 100% loss on those funds unless they take the money and bury it in a pit. The money will just return to the treasury, not the fed. The fed's balance sheet is imaginary anyway.

We were discussing the fed handing out money to consumers, not the US Treasury. Tax dollars (which is what I assume you meant by "the money will just return to the treasury") do not go to pay for fed operations. And the fed's balance sheet is distinct and separate from the US federal government's balance sheet. My point stands, a handout to consumers would be a 100% loss for the Fed.

A loss for whom? It is all taxpayer money. Does it matter if the Fed makes a profit or if the money is refunded back to the public? It is the equivalent of a stock dividend.

A bit of a nit. Treasury money is taxpayer money. Fed money is ... not. It's seigniorage.

But the point of this subthread remains; corporate loans are expected to be paid back (less some loss reserve, but plus some credit spread), whilst direct payments to individuals are not.

[Edit: should speak of corporate bonds, not loans, for precision. There is a big difference though for this thread it's minor.]

Any profit from the Fed goes back to the Treasury and seigniorage is basically a tax on all USD holders through inflation so it is largely a distinction without a difference. It is our money. Giving it back to us isn't a "loss".

Exactly right. But I'd even take it a step further, if we use that money to create material things like infrastructure (rather than endless financial instruments) is that really a loss? The dollar could cease to hold any value and we'd still have bridges and roads afterwards.

I might not have said it in that comment, but I totally agree with you. It is one thing to talk about the efficiency of government spending, but it is almost always stupid for us to talk about government programs or projects in terms of profits and losses.

A loss for the Fed.

And why do we care whether the Fed is profitable?

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