I know very little about how this works, so bear with me here.
This is going to be hyper over simplified, but...
The Fed lends money to certain banks that, in turn, lend money
to other banks and people and businesses...and whomever needs
money and is credit worthy...right?
To get this money, the Fed borrows it from the U.S. Treasury--or just taps the Treasury...right?
But, we're broke...right?
Here I see that the U.S. auctioned off some debt in the 1.5-2.0% range.
http://www.google.com/hostednews/ap/...dFiTwD9E621FO0
Here I see that the Federal Reserve discount rate to banks is .75%, up from .50% recently.
http://www.marketwatch.com/story/fed...k=MW_news_stmp
Does this mean that the U.S. takes about a 1% hit on all the money the Fed lends?
What the hell does that cost?
I ask because I have never heard anyone discuss this gap. It's lost money, right?
This seems like a massive expense.