In actual practice, does the Fed monetize the debt?
A)No, it did not do so even with large deficits in the 1980s and early 2000s.
B)No longer, although it monetized much of the deficit in the 1980s.
C)Yes, although it monetizes less now than in the 1980s.
D)Yes, it has monetized the deficit steadily since the early 1970s.

Question

Quizplus · Accepted Answer

Despite concerns about potential inflation, the Federal Reserve has generally avoided directly monetizing the debt. While there have been some instances of large purchases of government securities, particularly in the aftermath of the 2008 financial crisis, these actions have typically been aimed at stabilizing financial markets rather than monetizing the debt. Overall, the Fed has worked to maintain its independence and avoid direct political pressure to finance deficits through monetary policy.

In Actual Practice, Does the Fed Monetize the Debt