Council of Economic Advisors Chair on Why We Borrow in Dollars
Council of Economic Advisors Chair on Why We Borrow in Dollars
MATT BRIGIDA
Associate Professor of Finance (SUNY Polytechnic Institute) & Financial Education Advisor, Milken Institute
"Why are we borrowing in a currency we print ourselves?"
"We are borrowing in a currency the Federal Reserve controls (not us)."
Who is "We"?
"We" are the US Government, and the US Treasury is the part of the Government borrowing.
Through our elected representatives, we can decide how much we spend.
How does the US Treasury borrow?
- The US Treasury sells bonds in order to borrow
- Banks (primary dealers) buy these bonds
- The Fed buys these bonds from bank to change the money supply