That's cool, I feel you. 

1. Semantics. The Fed is a banking cartel, the banks/ primary dealers and the Fed are functionally the same entity. The fact that banks have to "by law" buy the Treasuries first, before turning around and flipping them to the Fed at a profit, makes zero functional difference in the effect of the debt monetization. 

2. Most. Again, semantics. If it's not essential to keeping the system going, why do they do it? Why devalue the dollar by 40% in the early 30s? Why remove the ability for individuals to redeem dollars for gold? Why YCC in the 40s? Why manipulate the gold price in the 60s? Why remove the final link to gold in the 70s? Why the money printing in 08? Why continue printing for almost a decade? Why more printing in 2019? Why print trillions in 2020? 

It's not the debt bought by individuals, foreigners, etc that's relevant. It's all the "emergency" liquidity injection. Every item in that list was some version of liquidity injection, financial repression, or the equivalent designed for the purpose of keeping the banking system propped up so they can keep the Treasury propped up. If the Treasury wasn't dependent on that system to indirectly finance their fiscal incontinence through inflation, I could see your point. But it's either that, or the Treasury prints it directly. The outcome is the same either way, except for the size of the bankers' cut. The Weimar central bank "discounted Treasury bills" too, instead of letting the Treasury print it directly. Didn't save them in the end either. 

Sure the balance sheet shrank as debt rose. Reverse repo also got sucked down from 2 trillion to almost nothing. You think reverse repo goes to zero, Fed balance sheet keeps falling, and government debt keeps rising at 2-3 trillion a year? My guess is no, I expect the Fed balance sheet to double from here by 2030. 

3. I'll wait to see the US government run $2.8 trillion annual deficits and borrow Bitcoin at under 5%. You can't borrow hard money at interest for non-productive purposes. You'll get wiped out so fast your head will spin. The US government will be no exception. 

That's my opinion, we'll see how it plays out.  

 I don’t disagree with any of this.  I don’t particularly understand your point about being dependent on the system?  Of course if would crash without it and 100% needs the current system to maintain the deficits. 

No argument here in the slightest and I never, ever, have argued otherwise.

I have a degree in macro economics, with a monetary systems and commodities specialty. Nothing you said there is news to me. 

 Ah okay, I'm probably just misunderstanding your comments. 

 "Governments don't need fractional reserve banking."

"The fed could dissappear tomorrow and the treasury could still issue debt.

It would merely have to be paid for by the savings of individuals, companies, funds, banks, etc..  

This is 100% possible without fractional reserve banking and could still be the case on a bitcoin standard in fact."


 

 For millenia, governments and kingdoms have existed without fractional banking, and banking at all.  However they abuse such a plight, and start debasing their goals, pearls, dollars, etc..

This isn't a requirement to run a government. rather a want and desire of powerful men taking advantage of their people.  Politics...