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Banks lending to people who cannot pay, and then selling the bonds to the fed. This becomes a handout both to banks, and anyone with lending access. In the rea

• onlyrealcuzzo 6y ago
  That works for bank executives, not shareholders or individuals.
  • gridlockd 6y ago
    It's really more diffuse than that. These measures drive down corporate bond yields across the board, giving them access to capital to use less wisely, or to operate in zombie mode, being unprofitable but never defaulting due to perpetually cheap debt. The corollary of this situation is that the Fed must not allow debt rates to rise, otherwise an enormous wave of corporate defaults within a short timeframe would ensue. This also explains why markets keep rising even when the economy is in shambles. The Fed will be a buyer of last resort for everything (the "Powell Put"). Yields are near zero for everything "safe", the money in the funds has to go somewhere, so it goes to assets like stocks and corporate bonds. Stock prices go up, bond yields go down. Corporations can get cheap debt to buy back their own stock. Meanwhile, the Fed can act like there's no inflation because the CPI doesn't reflect these capital flows, at least not in the average. However, if you split up the CPI, you see significant inflation in some areas, whereas you see natural deflation (due to better productivity/technology) in other areas. The individual or the mom-and-pop store indeed do not have access to this capital, they are footing the bill.