Kotlikoff: We're Broke Now

The Treasury-Federal Reserve Naked Tango

Professor  Lawrence Kotlikoff  explains:

[W]hile Bernanke says [his money printing] is all to keep down interest rates, there is a darker subtext here. When the Treasury prints bonds and sells them to the public for cash and the Fed prints cash and uses it to buy the newly printed bonds back from the public, the Treasury ends up with the extra cash, the public ends up with the same cash it had initially, and the Fed ends up with the new bonds.

Yes, the Treasury pays interest and principal to the Fed on the bonds, but the Fed hands that interest and principal back to the Treasury as profits earned by a government corporation, namely the Fed. So, the outcome of this shell game is no different from having the Treasury simply print money and spend it as it likes.

The fact that the Fed and Treasury dance this financial pas de deux shows how much they want to keep the public in the dark about what they are doing. And what they are doing, these days, is printing, out of thin air, 29 cents of every $1 being spent by the federal government.

Here are a few links that Kotlikoff mentioned in his interview:
1.  TheInformAct.org
2.  ThePurpleHealthPlan.org
3.  Kotlikoff.net
4.  MaximizeMySocialSecurity.com