[Econfon] addendum to tuesday's lecture

[Noemi Giszpenc]

There were a bunch of good questions during class on Tuesday. I found an 
article online that explains a lot about the Federal Reserve System. Here it 
is:
http://money.howstuffworks.com/fed.htm/printable

One of the questions on Tuesday was whether when the Fed sells securities 
(to reduce the money supply), is that a creation of government debt. The 
article doesn't say so explicitly, and I think the answer is no. The Fed is 
the government's bank, but it doesn't have the power to create government 
debt independently. I think that the answer is that there is just a certain 
amount of government bonds in existence, and they have a different effect on 
the economy if they are held by banks or by the Fed. I'll research it more 
though and try to make sure.

See you next week,
Noemi