Today we learned that the Federal Reserve is going to buy $800 billion of loans from banks (story). Where is this money coming from? The Fed is going to have to give banks $800 billion in cash in exchange for the right to collect whatever money gets paid over the years on car loans, student loans, and mortgages. It sounds like taxpayer cash is going out the door right now, yet there was no corresponding story about Congress raising $800 billion in taxes. There was no corresponding story about Congress authorizing $800 billion in spending. We didn’t hear about the U.S. government selling $800 billion in new bonds.
So… where is this money coming from? Are we printing it, borrowing it, taxing it, or “other”?