Sunday, November 6, 2011

Effects of Quantitative Easing (QE)...?

So I understand the fundamental basis of QE (1 & 2). I also understand how the Fed's action of pumping "easy" money into the market forces people into riskier ets as a result of low interest rates. However, what I don't understand is how this so-called easy money makes its way into the market. This is how I understand it: The Fed buys Treasuries from the Treasury Dept. But how does that easy money make get transferred from the treasury into the so-called "market" and subsequently force people into riskier ets with higher yields of return?

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