Can the Fed erase/reduce public debt?

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Can the federal government reduce its debt by getting the Federal Reserve to write off /forgive government bonds that it buys in conducting quantitative easing?


The short answer is, no. By law, the U.S Fed is an independent authority in charge of the monetary affairs of this nation. The White House cannot formally ask or force the Fed to do anything. If the Fed tried such a move, it would send panic waves through world markets because it would suggest that the U.S. is, in effect, defaulting on its debt obligations to the world.

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Last updated on April 29, 2020