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<p>[QUOTE=&quot;Cloudsweeper99, post: 1248732, member: 3011&quot;]This is a common story used to discredit the Fed, but it has a couple of flaws.&nbsp; First, the Treasury doesn&#039;t necessarily borrow from the Fed.&nbsp; The normal process is to borrow on the open market which takes a dollar out of circulation for each one put in, keeping the money supply stable.&nbsp; And regarding the interest, this would only be true of money was the only form of wealth in the economy, but it is not.&nbsp; If $1 is borrowed at 5% and is used by a business to generate an economic output that is, say 15% greater than the capital input [which is the whole purpose of business], then the 5% is paid back with 10% of economic value to spare in the form of goods and services.&nbsp; Remember, it isn&#039;t just the number of dollars in circulation that matters.[/QUOTE]</p><p><br /></p>

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