When the FED buys the debt they are giving fake "cash" for a piece of paper.  So the FED gives money for a piece of paper, so they are increasing money in the system, not decreasing.

You also must keep in mind that they are buying debt.  They buy 10 year T bills, which are debts of the people of the US.  Then they take this DEBT and on paper change it into an asset of the bank.  Now do you understand that our lender of last resort (the biggest bank in the world), is using the US debt as a basis to expand the money supply.

The only assets I am talking about are repurchase agreements, repo's, and those are done with other governments or our government.

T-Bill's not sold to public ---> Congress takes these to the FED and the FED writes a check ---> On the FED balance sheets, this debt is now a securities asset ---> the government deposits the money into commercial banks through issuing checks to various people agencies, etc. ---> those banks receiving the money only needs to hold a fraction of what was deposited so this orignal govt money has been re deposited up to nine times and up to 9 banks lend of 80-90% of whatever was deposited  ---. so they loan out the rest and it cycles.

The world didn't want to take on the debt of the US, but when the FED assumes the debt (enters in a repo agreement with the govt) it is in effect, creating money from debt.  Thinking only in terms of off setting debits and credits in accounting terms won't let you see the bigger picture.

Does this answer your question?

"Because the Federal Reserve can be counted on to "monetize" (convert into money) virtually any amount of government debt, and because this process of expanding the money supply is the primary cause of inflation, it is tempting to jump to the conclusion that federal debt and inflation are but two aspects of the same phenomenon. This, however, is not necessarily true. It is quite possible to have either one without the other.

The banking cartel holds a monopoly in the manufacture of money. Consequently, money is created only when IOUs are "monetized" by the Fed or by commercial banks. When private individuals, corporations, or institutions purchase government bonds, they must use money they have previously earned and saved. In other words, no new money is created, because they are using funds that are already in existence. Therefore, the sale of government bonds to the banking system is inflationary, but when sold to the private sector, it is not. That is the primary reason the United States avoided massive inflation during the 1980s when the federal government was going into debt at a greater rate than ever before in its history. By keeping interest rates high, these bonds became attractive to private investors, including those in other countries. Very little new money was created, because most of the bonds were purchased with American dollars already in existence. This, of course, was a temporary fix at best.

Today, those bonds are continually maturing and are being replaced by still more bonds to include the original debt plus accumulated interest. Eventually this process must come to an end and, when it does, the Fed will have no choice but to literally buy back all the debt of the '80s -- that is, to replace all of the formerly invested private money with newly manufactured fiat money -- plus a great deal more to cover the interest. Then we will understand the meaning of inflation."

This may be the reason the Fed suspended the M3 because they are beginning the process to "buy back" all the private debt plus interest from the 80s and early 90's.  The ponzi scheme is coming to an end, there is no way out.  It was fun while it lasted...

==AC

http://www.thomaspmbarnett.com/images/pentagons_new_map.jpg

are all working together towards a common goal.  Through central banking they have gained control of governments and are in the process of redistributing the wealth around the globe.  When this process is completed the will pull the plug on the current finacial paradigm and bring about a high-tech global feudalism under the guise of a New World Order.  If I was at the top of the pyramid it is what I would do. We must die so they may live.

==AC

Dogs of war and men of hate

With no cause, we don't discriminate

Discovery is to be disowned

Our currency is flesh and bone

Hell opened up and put on sale

Gather round and haggle

For hard cash, we will lie and deceive

Even our masters don't know the webs we weave

On world, it's a battleground

One world and they smash it down

One world...one world

Invisible transfers, long distance calls

Hollow laughter in marble halls

Steps have been taken, a silent uproar

Has unleashed, the dogs of war

You can't stop what has begun

Signed, sealed, they deliver oblivion

We all have a dark side, to say the least

And dealing in death is the nature of the beast

On world, it's a battleground

One world and they smash it down

One world...one world

The Dogs of War don't negotiate

The Dogs of War won't capitulate

They will take and you will give

And you must die so that they may live

You can knock at any door

But wherever you go, you know they've been there before

Well winners can lose and things can get strained

But whatever you change, you know the dogs remain

On world, it's a battleground

One world and we're going to smash it down

One world...one world
~Pink Floyd