For The Fed, The Downside Of Being Debt Free

Dwindling Treasury debt is not only a problem for Social Security. It's causing headaches for Federal Reserve Chairman Alan Greenspan and his monetary mandarins, too. To satisfy the public's demand for cash, the Fed regularly pumps money into the financial system by buying Treasuries from an elite band of securities dealers. Over the years, the Fed's portfolio of U.S. government debt has gradually grown to about a half-trillion dollars as demand for U.S. currency has increased along with the economic boom.

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