AlexR

To Monetize or Not to Monetize: Who Cares?

I believe the point missed here is a sort of "displacement" that occurs. When the Fed buys $100B worth of treasuries from the "public", that forces the public to find other places to invest $100B. Most of these displaced funds will go into bank balance sheets (FDIC insured deposits) and money market holdings, both of which do have a real economic effect: bank deposits increase the money supply; while money market influxes cause corporate short-term borrowing rates to go down.