2020
How the Government Pulls Coronavirus Relief Money Out of Thin Air
https://www.nytimes.com/2020/04/15/busi ... money.html
The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money — every penny of it borrowed.
And where is all that cash coming from? Mostly out of thin air.
2021
Where does the money for stimulus payments come from?
https://www.wxyz.com/news/coronavirus/w ... -come-from
If you've ever wondered where that money comes from, you're not alone? Does the government just print the money, or does it come from taxes, or is it borrowed?
The U.S. Mint headquarters in Washington D.C. is quite literally the building in charge of printing money. But when it comes to where stimulus and unemployment money comes from, the printing press or U.S. Mint actually isn't involved at all.
In order for Congress to pass these trillion-dollar laws that eventually gets you money in your wallet, the Treasury Department has to borrow money.
Unlike you or me, the treasury department can borrow as much as they want. They can borrow money from private investors, foreign entities and other governments.
Basically, the treasury department issues a bond or a note, that is really an IOU, promising to pay back the money with a little bit of interest one day. But the biggest buyer of these IOUs right now is an entity called the federal reserve. They have the power to create money.
But, again they aren't printing anything. Instead, they are typing a number into their computer, and like magic, a digital currency is borrowed by the treasury department. All that borrowing gives the treasury department the ability to issue those stimulus checks.
So is there a risk to all this? There is a word that scares economists. The word inflation. That's when there is too much money in circulation and there aren't enough goods. That's when money becomes nearly worthless like in some third-world countries.
Now, economists don't believe we are at a risk for that right now, as long as all this is managed correctly and our economy is still producing more than we owe. And while all of this may sound complicated. That's how getting a stimulus checks works.
