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The US government borrows money to fund the deficit by issuing and selling especially tresury bonds, but savings bonds and others are out there too to help finance the deficit. That is most important to all of us.

The Federal Reserve bank headed by Ben Bernanke is responsible especially for controlling inflation and trying to stabilize the US economy. They usually control things by raising or lowering interest rates which has the effect of increasing or decreasing money supply and the ability to borrow money.

With the economy slow, the Feds try to stimulate the economy by lowering interest rates. But rates have been very low for quite a while. So recently they have been buying bonds to keep up interest rates. I presume that means the Federal Reserve bank buys bonds that would otherwise be sold to the public (or other governments).

Interest rates are the main influence that working middle class sees. If rates are low, you can refinance your mortgage at better rates. Credit card debt, home equity loans, new car loans, etc all cost less. That makes it cheaper to borrow money.

Stimulating the economy means lower unemployment, more business, more jobs, and generally better times. But those aspects are a bit more subtle.

Putting people back to work and growing the economy generally makes good times for all of us. Jobs available. Business good. Everybody who wants a job can find one. This is much better than the alternative (as long as things don't go up too fast).
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