brianoh

Who Benefits When the Fed Floods the System with Liquidity?

"when Easy Al took interest rates down to 1% and held them there for a very long time, it did not stop the Nasdaq from falling 77%. Instead, the liquidity flowed into housing, ..."
The dotnet bubble had already burst at that point and the Nasdaq had lost 50%+. The interest rate cuts were to stop the Dow and S&P falling to realistic levels. These cuts began in 2001. The Dow had risen 10 fold (1000%) in 13 years up to its high of 12000 and was then falling. The liquidity did flow into housing of course and cause the bubble.