Reply #36: You misunderstand how this works [View All]

[anigbrowl]

First, it's not nothing, it's about 1.6% of debt which is not to be sneezed at. Better to pay it off than to keep paying interest on it. Now what you're missing is that the money has already been borrowed, that is to say the Treasury has it because the Federal Reserve bought treasury bills (on which interest is payable). there isn't some giant swimming pool full of dollar bills that the Fed and the Treasury have joint custody over. Financial instruments (specifically, the treasury bills) change hands in such a transaction. That's $200 billion that won't get printed as currency, and thus deflates the money supply somewhat, in turn slightly increasing the value of the US dollar.