4 ms·

Yes. The money doesn't go to banks or stocks or real estate.

• pas 11y ago
  Well, yes and no. The money goes to bondholders, and whoever held the assets the Fed purchased. Basically investors. The important thing to notice is that this is all a marginal effect. The Fed bought stuff already on the market, so the asset holders already wanted to liquidate those assets, but with the Fed entering the market and driving [bond] prices up (thus keeping [bond] yields down) investors can't just roll over the money, and other investors are discouraged to invest into low-yield assets, thus they try to invest into other stuff, bonds of riskier companies, foreign markets! (The QE programs drove yields down all across the globe, foreign currencies up http://www.bloomberg.com/news/articles/2015-01-23/rupiah-philippine-peso-gain-this-week-as-ecb-spurs-yield-hunt http://www.bloomberg.com/news/articles/2015-01-23/rupiah-phi... and as a QE program ended this caused problems http://www.reuters.com/article/2013/08/19/us-india-markets-rupee-idUSBRE97I0DD20130819 http://www.reuters.com/article/2013/08/19/us-india-markets-r..., because governments - just like in pre-2008 - saw cheap loans and went to town.) So, all in all, money goes where the investor things it'll grow best (low righ and high yield). Real estate was that after 2000, nowadays it's all over the place. (RE is picking up again, look at the insane prices in SF and London; VCs pour billions into emerging sectors - look at the valuations here on HN; and naturally people look for riskier things, abroad, which is good for the global economy.)