37 trillion
where do you surmise it has all gone?
[/quote]
Every penny of it is sitting in accounts at the Fed.A Treasury bond exists as a term savings account at the Fed. The Treasury creates a $100K Treasury bond by crediting a bond account at the Fed with $100K.
When it does this, it's creating dollars "out of thin air." That's how national govts create money: by adding numbers to bank accounts.
The bonds are sold at Treasury auctions to Primary Dealers—25 or so large banks and brokerages.
The primary dealers are obligated to bid on and buy the Treasury bonds on offer.
The Primary Dealers exchange reserves (dollars that only banks & the govt use) for an equal sum of bonds.
The Fed provides any needed reserves for the purchases to be completed.
The $100K proceeds are credited to the Treasury General Account and that sum is spent according to Congressional appropriations.
Meanwhile, the purchaser still has $100K in the bond account at the Fed. Thus, $100K has been added to the private economy.
When the bond matures, the $100K is shifted from the bond account back to a reserve account, all at the Fed.
The bond is thus "paid off"—$100K has been returned to the holder (who by now has bought the bond in the secondary market).
No taxes are ever involved in the redeeming of Treasury bonds — not now, not in the future.
Taxation comes
after the spending, to offset unwanted effects of the spending, such as inflation (mandatory), wealth inequality, etc. (societal choices).
Basically, income tax on consumers removes excess demand that would sooner or later cause high inflation.
Still here.
