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> 99% of that money was never spent Then where did it go?

• ChrisLomont 9y ago
  A lot of it was a backstop in case it was needed, but those reserves were not tapped. Basically the Fed made lines of credit (with strings attached) open to banks to guarantee liquidity, increasing trust in markets. Banks didn't withdraw the money, and some that did (or were forced to take it to dissuade bank runs on the others) paid it back quickly to get out from under the strings. Here's [1] a decent source on the finances of the bailout (which were actually loans). [1] https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/
• andrewaylett 9y ago
  In the UK, at least, the Bank of England used QE money to buy government bonds. This meant that the bond-holders could exchange their illiquid bonds for cash, which they then needed to do something with. The BoE then collected and destroyed government payments on the bonds, so the net amount of money doesn't change in the long-term. One side-effect of this is that the cost of bonds went up -- demand had increased -- so the profitability of buying them went down, meaning the banks were naturally incentivised to do something else with that money. It's not a panacea, but it is quite a neat lever to have when you want to increase the supply of money without actually spending any. Unfortunately it still looks like the banks are being given lots of free cash, but it's not actually free.