US Treasury Prints Money to Pay Interest on Money It Printed to Pay Interest
The Federal Reserve has initiated "quantitative easing squared," a new policy of printing money specifically to cover interest payments on previously printed money, creating a perfect loop of fiscal responsibility.
The FY Times Staff
Published on
Read time
4 min read
The Plan
The Federal Reserve announced a groundbreaking monetary policy: quantitative easing squared, or QE², whereby new dollars are conjured solely to service the interest on previous conjured dollars. Chair Jerome Powell called it ‘recycling with compound interest.’ The plan adds $1.4 trillion to the balance sheet, pushing total debt past $36 trillion, a number so large it requires its own zip code.
The Numbers
Factual nugget: The Congressional Budget Office projects net interest payments will hit $1 trillion in 2026, surpassing defense spending. Debt-to-GDP sits at 123 %, higher than post-WWII peaks. The Fed’s balance sheet remains $7 trillion above pre-2008 levels.
The New Dollar
Satirical twist: Treasury Secretary Janet Yellen unveiled the new $1,000 bill featuring a QR code that links to a TikTok dance explaining inflation. Early prints accidentally included a typo reading ‘In God We Truss,’ causing a brief diplomatic incident with the UK. Wall Street cheered; Main Street googled ‘hyperinflation memes.’
Operation Infinite Loop
Operation ‘Infinite Loop’ begins with the Fed buying Treasury bonds issued to pay interest on bonds the Fed already owns. Economists call it a ‘self-licking ice cream cone.’ Nobel laureate Paul Krugman praised the elegance, then quietly converted his prize money to gold bars and canned beans. Libertarians updated their doomsday bunkers; progressives demanded the new trillions fund universal basic income, universal healthcare, and universal pony rides.
Congressional Capers
Congress, not to be outdone, attached a rider mandating the Bureau of Engraving print commemorative bills with pop-up White House. The GAO estimates each pop-up costs $400; total program: $12 billion. When questioned, Senate Majority Leader Chuck Schumer replied, ‘Pop-ups build character.’ Minority Leader Mitch McConnell added, ‘And obstruct the view of the debt clock.’
Global Reaction
Abroad, China giggled and bought more Bitcoin. Russia offered to accept payment in potatoes. The IMF issued a sternly worded emoji. Domestically, the Dollar Menu at McDonald’s became the $20 Menu, but the Treasury insists inflation is ‘transitory – like, 50 years transitory.’
A Word from the Chairman
Powell reassured markets via Zoom from an undisclosed bunker: ‘As long as we control the printer, we control the narrative.’ A junior analyst asked what happens when the paper runs out. Powell promoted him to Head of Paper Procurement. The promotion budget: $2.8 million. God bless the United States of IOU.