3 ms·
What does the deficit have to do with the Fed? QE doesn't grow the deficit.
by OscarCunningham 7y ago
What does the deficit have to do with the Fed? QE doesn't grow the deficit.
- liuliu 7y agoDeficit is funded through debt (treasury notes). Fed buys treasury notes (through QE) and sets the interest rate on these debt. Lower interest rate in short-term reduces deficit (smaller coupon payment), but in longer-term encourages borrowing.