I am trying to get a better understanding of the implication of this chart. The values shown on it are clearly pushing to an extreme, but it's not clear to me if that's actually significant.
I understand that the Federal Reserve is not required to run at a surplus, but, if it does, it pays the surplus to the Treasury which is used to pay for government services and mitigate national debt. If the Fed runs at a deficit then nothing bad happens directly as it's a public service and can print money.
Is there anything more to this? Is a simplistic, yet accurate, interpretation that U.S. debt is more likely to grow when this chart is in the negative, but that no significant adverse effects are directly tied to these numbers?
I understand that the Federal Reserve is not required to run at a surplus, but, if it does, it pays the surplus to the Treasury which is used to pay for government services and mitigate national debt. If the Fed runs at a deficit then nothing bad happens directly as it's a public service and can print money.
Is there anything more to this? Is a simplistic, yet accurate, interpretation that U.S. debt is more likely to grow when this chart is in the negative, but that no significant adverse effects are directly tied to these numbers?