The Federal Reserve never buys U.S. Treasury bills directly from the federal government because it could:

Question

Quizplus · Accepted Answer

Directly buying U.S. Treasury bills from the federal government could lead to an increase in the money supply and result in inflation, which is a situation the Federal Reserve tries to avoid. Instead, the Fed buys and sells Treasury bills in the secondary market, which allows them to influence interest rates without directly increasing the money supply.

The Federal Reserve Never Buys U