Thursday, March 3, 2011

Quantitative Easing

Direct injections of money into the economy can have a number of effects. The sellers of the assets have more money so may go out and spend it. That will help to boost growth. Or like in reality they may buy other assets instead, such as shares (share buy back policies) or company bonds which we have seen in past, the corporations have money ,they are already sitting on a lot of cash.
By buying MBS,AAA Corporate debt, long term treasury securities the FED’s anticipation of reenergizing economic activities needs to be closely watched