<p>On page 192 of the 5th edition, George Edward Griffin begins to describe
the &quot;Mandrake Mechanism&quot;, chapter ten, in &quot;The Creature from Jekyll Island&quot;.</p>
<blockquote>
<p>First, the Fed takes all the government bonds which the public does<br />
not buy and writes a check to Congress in exchange for them. (It<br />
acquires other debt obligations as well, but government bonds comprise
most of its inventory.)</p>
</blockquote>
<p>I don't understand it.  The government issues bonds.  Some people buy it.  Some bonds are not bought.  How does Congress get involved in this?  Is it the case that Congress buys all those people did not buy?  With what money does Congress buy?  Is Griffin saying that the Fed itself ``writes a check to Congress'' so that Congress can afford it?</p>
<p>Update. The question is requesting not a profound understanding of the process, but only the process itself.  If Griffin doesn't describe it properly, I would consider an excellent answer the mere description of this first step of the process that Griffin tried to describe.</p>

CC BY-SA 4.0
2020-08-05T13:23:00.510Z
My guesses: (a) "Congress" here seems to stand for the US Government (in practice the Treasury) covering the difference between spending and taxation, both of which are decided by Congress and (b) the Federal Reserve usually buys Treasury bills, notes and bonds in the secondary market rather than directly, but since this is known the practical effect is similar to buying them directly
Henry
CC BY-SA 4.0
2020-08-05T14:33:29.413Z
As per the previous comment, Griffin has only a loose grasp of the subject. The Fed may have been able to buy Treasury securities at auction in the past, but can no longer do so. There difference is that auctions can fail if the Fed does not step in. In the absence of plausible default risks, this difference is not material.
Brian Romanchuk
CC BY-SA 4.0
2020-08-06T02:06:04.583Z
The question is requesting not a profound understanding of the process, but only the process itself.  If Griffin doesn't describe it properly, I would consider an excellent answer the mere description of this first step of the process that Griffin tried to describe.  I'm updating the question with this request, in case any of you would like to describe.  I'll accept as an answer.
user12406990
<macroeconomics><federal-reserve>
What does "writes a check to Congress in exchange for them" mean in this context?
user12406990
# What does "writes a check to Congress in exchange for them" mean in this context?

(Asked by: username_0 on 2020-08-05)

On page 192 of the 5th edition, George Edward Griffin begins to describe
the "Mandrake Mechanism", chapter ten, in "The Creature from Jekyll Island".

> First, the Fed takes all the government bonds which the public does  
> not buy and writes a check to Congress in exchange for them. (It  
> acquires other debt obligations as well, but government bonds comprise
> most of its inventory.)

I don't understand it. The government issues bonds. Some people buy it. Some bonds are not bought. How does Congress get involved in this? Is it the case that Congress buys all those people did not buy? With what money does Congress buy? Is Griffin saying that the Fed itself ``writes a check to Congress'' so that Congress can afford it?

Update. The question is requesting not a profound understanding of the process, but only the process itself. If Griffin doesn't describe it properly, I would consider an excellent answer the mere description of this first step of the process that Griffin tried to describe.

**Tags:** macroeconomics, federal-reserve

> **Comments:**
> **username_1**: My guesses: (a) "Congress" here seems to stand for the US Government (in practice the Treasury) covering the difference between spending and taxation, both of which are decided by Congress and (b) the Federal Reserve usually buys Treasury bills, notes and bonds in the secondary market rather than directly, but since this is known the practical effect is similar to buying them directly  
> **username_2**: As per the previous comment, Griffin has only a loose grasp of the subject. The Fed may have been able to buy Treasury securities at auction in the past, but can no longer do so. There difference is that auctions can fail if the Fed does not step in. In the absence of plausible default risks, this difference is not material.  
> **username_0**: The question is requesting not a profound understanding of the process, but only the process itself.  If Griffin doesn't describe it properly, I would consider an excellent answer the mere description of this first step of the process that Griffin tried to describe.  I'm updating the question with this request, in case any of you would like to describe.  I'll accept as an answer.  

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## 0 answers

