[wbsss4412]

> EDIT: Maybe this helps - you're taking for granted that the US Treasury auctions an increasingly large amount of Treasuries to cover an increasingly large amount of debt, but The Fed doesn't create that debt, that's a separate phenomenon. If the government balanced its budget for a year, does that create liquidity?

Do you actually understand what liquidity is?

Bonds are just one instrument the fed uses, the bond market isn’t the end all be all of open market operations. As I noted earlier, the fed was previously injecting liquidity by buying bonds and mortgages. What you’re talking about is tangential.

Liquidity is the amount of cash in the system relative the size of the market for assets. All else equal, adding or removing is the same as adding or removing cash.