Where is all this money coming from?

CHARLOTTE, N.C. - The Federal Reserve on Wednesday agreed to provide insurance giant American International Group Inc. with a loan of up to $37.8 billion, on top of one made to the troubled company last month.

Another $37.8 billion? Is this another $37.8 billion? On top of all the other money?

And where, exactly, is it coming from?

Under the new program, the Federal Reserve Bank of New York will borrow up to $37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.

So the Fed is going to borrow all that money to lend to AIG.

But...I thought the credit industry was totally kaput. Who is the Fed borrowing it from, and why can't AIG just borrow it from them themselves?

And by the way, if all this federal spending is supposed to calm the markets, it isn't working.