But here's an important reminder: When the Fed buys bonds, it's not spending the government's cash. Rather, it creates the money by electronically crediting the reserves of banks.
Indeed, even though the Federal Reserve earns interest on securities, $77.4 billion last year $81.7 billion the year before, after paying its own administrative expenses, the Fed turns the remaining 95% of those profits over to the Treasury Department, which can use them to pay government bills.
