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Old 03-28-2020, 08:47 PM   #115 (permalink)
JSH
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Quote:
Originally Posted by freebeard View Post
Well ...it wasn't exactly a campaign promise.

What does it mean when Federal Reserve bonds are purchased by Treasury instead of the Reserve. I'm no expert.
It means the Fed is adding liquidity to the market. They are buying treasuries from banks (not directly from the Treasury in daily auctions) to pump money into the market and keep banks from hording cash and freezing up the system.

They did the same thing in 2008 / 2009. In late 2008 banks had a lot of assets but needed cash. The problem was nobody wanted to give up cash to buy the assets. So the Fed stepped in and bought those assets which pumped much need cash (liquidity) into the markets. Then when the economy got better they started selling off those assets (treasures, bonds, mortgages, etc) that they bought during the financial crisis back into the open market.

The European and Japanese central banks do the same thing.
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