> If the goal is to prime the economic pump with an influx of new money, put that money in the hands of people who will actually go out and buy something. ... [

> If the goal is to prime the economic pump with an influx of new money, put that money in the hands of people who will actually go out and buy something. ... [from nostromo's grandchild comment] My question is simply: why use asset buying as a vehicle for injecting money into the economy and not cash to citizens? Because when the Fed buys bonds, it temporarily puts cash into the economy, but sending people checks would permanently increase the money supply. If inflation gets too high, the Fed can sell off its bonds, destroying the money it created to buy them. And even if it doesn't sell its bonds before they mature, the income on those bonds—the payments of interest and principal—is a cash flow that represents a slow, steady destruction of the money the Fed created to buy them. In this passive way, the Fed is already gradually undoing its quantitative easing, and has been doing since it scaled back its bond purchases. (The Fed's profits—i.e., money beyond what it created to buy the bonds—go to shareholders and the federal treasury, so exactly as much money is destroyed as is created by the time the bond reaches maturity, by the way.) A permanent increase in the money supply, on the other hand, would almost certainly show up as inflation at some point.