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> a new player shows up in the markets buying trillions of dollars worth of securities, due to the law of supply and demand, one can expect price of stocks to g
by nerfhammer 12y ago
> a new player shows up in the markets buying trillions of dollars worth of securities, due to the law of supply and demand, one can expect price of stocks to go up.
> which means that the Fed flooded secondary markets (stock exchanges among them) with more than 3 trillion dollars
QE does not involve buying stocks. QE decreases bond yields making stocks relatively attractive vs. bonds.
- josu 12y agoYou are right, however, the Fed did buy almost 2 trillion worth of mortgage-backed securities which trade on the open market.
- nerfhammer 12y agoThe Fed virtually always buys and sells securities on open markets.
- josu 12y agoYeah, but as far as I know, they are usually repo agreements, buying MBS is something new.