Warren, another question occurred to this dummy when discussing elsewhere alternative uses of the funds from coinage gains.
1) Treasury uses the funds to retire outstanding securities (making room for new borrowing and spending under the ceiling).
2) Treasury uses the funds to spend directly (for authorized budget items).
In either case, new reserves are added to the system, right? And there is no offsetting reserve drain, right? According to my rough understanding of the fed’s interest rate control mechanism, presence of excess reserves in the system puts the fed in a difficult place, and the interest rate it is trying to control (so-called ffr?) drops to 0%.
Is that right? Or maybe, the rate drops like that, but that’s fine?
Thanks in advance.