In a column today, Higgs states with regard to Federal Reserve money being offered to Freddie Mac and Fannie Mae that:
...because the Fed itself is the lender, the loan will take the form of newly created money – that is, the loan will be pure inflation, a hidden tax on all assets denominated in dollar units, including dollar balances themselves.
The Fed to date has not been inflating as a result of recent money injections into the financial sector. It has been sterilizing its transactions by selling Treasury Securities it owns to finance the injections, from over $800 billion in Treasury securities owned last year, the Fed is down to only $380 billion.
In the last two months, the money supply measure M2NSA has not grown at all.
