Spehro Pefhany wrote:

On Thu, 09 Aug 2012 11:44:40 -0500, jim
wrote:



It received 1.3 trillion from bond buyers who understand
that the safest place to put their money is Tsy securities

AFAIUI, the Fed is essentially acting as a buyer of last resort,
buying very low interest longer term bonds since there are actually
not enough buyers who want US-dollar denominated longer term bonds.

There are more than enough buyers. The fact is, by law the Fed
cannot buy directly from the Treasury.


They call this virtually unprecedented action "quantitative easing"
and it is hoped to improve (increase) inflation towards the target of
2%-ish, since zero interest rates and deficit spending have both
failed. They have bought $2.3 trillion dollars "worth" so far
(starting as the seriousness of the crash became apparent in 2008).

Only $1.6 in treasury securities. They also purchased
around .6 trillion in mortgage backed securities.



http://www.npr.org/blogs/money/2010/...sing-explained
(the comments are good too)



The money used to purchase treasury securities is not circulating
in the economy. It is all sitting in bank reserve accounts.

http://research.stlouisfed.org/fred2...GNONBR?cid=123