Comment Re:Slaves to Debt (Score 1) 403
Only if they are intentionally trying to increase liquidity and decrease interest rates through an open market operation. Otherwise the bonds typically go to institutional investors who underwrite the bond issuance and turn around and sell the bonds on the open market. They get paid for in cash.
And when the Fed buys bonds, it doesn't necessarily print the money to do so, they have plenty sitting around. After all, they are the one bank in America that if they want more deposits, they can require that banks give it to them. And until very recently, when they started to implement the channel system, they didn't pay interest on reserves. This makes the Fed very profitable.
