Looking Forward: IRA’s Effects on Our Economy and Trading
This article is not mine (Ian Hartana) and I do not take credit for any of the work below. This article has been adapted and syndicated consensually by Mustafa Qureshi, who has given me consent to share this article on Medium. He is a writer under The Catalyst and is looking to canonicalize his writing to other platforms. Please check his own website out if you found this interesting.
This raises the obvious question of what the budget deficit has to do with inflation. While not always straightforward, the relationship is generally understood like this: the only reason governments can run budget deficits is because they can issue bonds. If the Federal Reserve purchases these securities, it simply buys as many as needed and deposits the corresponding amount in reserve banks. For more clarity, say the Fed decides to purchase $1 billion in Treasury bonds; they’ll buy them from banks, for example, who then receive $1 billion from the Federal Reserve in exchange for the bonds.
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