Oh, I need help again, this time with 401k's and social security.

[quaker bill]

19. with what do they buy it?

Where does the Fed get its notional money? (They pretty much just click it into existence). They are not only "buying" government debt, they are "buying" private debt, specifically mortgage debt. It is called quantitative easing (QE III) and what it does is increase the supply of money by clicking funds (money) into existence and using this new money to "purchase" debt. The banks lose loan liability and gain cash, that they can, in theory, loan. They aren't loaning it much which is why the program has had little effect, other than keeping interest rates very low for well qualified borrowers.

They are creating computer entries every day, and they have been telling us about it for some time now. This is why the PM market is so inflated, because the traders are expecting the value of the currency to plummet because so much new money has been created. The system is literally awash with new money, and to the extent anyplace isn't, the Fed makes more. The reason that the currency has not devalued is because is that this new money is largely not being circulated. This is actually a bad thing.