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Comment by epistasis | Hacker News Reader

The US prints two kinds of money: 1) dollars, which are subject to inflation and decrease in value over time, and 2) bonds, which accumulate in dollar value over time, usually in front of inflation.

So because we spent bonds instead of spending dollars, we can not take their dollar value as the cost, because that's most definitely not what we printed for these.

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Not exactly. The Federal Reserve and the US Treasury do a dance where the Treasury tells the Fed how many dollars it needs and then creates notes, bills, and bonds in the desired amount. It then performs a simple asset swap with the Fed to receive reserves in exchange for those bonds. This is slightly obfuscated by the primary dealer auction process, but in extremis the Fed can and will just buy the bonds itself. This never happens because for some reason the private banks that are primary dealers don't choose to give away free seigniorage money.

You say "not exactly," but I don't see anything that conflicts with what's described in my comment.

I do appreciate the details though, as it does help people understand the way that we have set up these institutions, which in turn points to what we might want to change to make the process better.

Thank you! The money printer goes brrr meme is dangerously wrong.

User23 is directly describing how the money printer's gears turn in detail, but the gears go brrrr all the same.

No, they do not. The banks are not loaning anything; thus there is zero brrring.

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