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View Diary: Market Humiliates S&P — Rejects Downgrade (266 comments)

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  •  LOL (1+ / 0-)
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    do you even understand what QE1 and QE 2 were?  no really?

    Do you understand what the ECB announced friday to stop the slide?  what they are doing today?  

    Bad is never good until worse happens

    by dark daze on Mon Aug 08, 2011 at 09:14:53 AM PDT

    [ Parent ]

    •  Do YOU understand what they were? (0+ / 0-)

      Normally, the Federal Reserve manipulates the Treasury auction by buying and selling T-bills (quantity adjustment) to achieve desired interest rates.  So, yes, there is a market.  Not a free market, but definitely a market -- the Fed isn't the only player!

      However, in QE1 and QE2, the Fed changed their policy -- they sold T-bills to buy junk.  This is a very different policy, which has no practical effect on interest rates (which are already basically zero).  It does, however, make the Fed potentially insolvent if the Fed doesn't spend some time printing Federal Reserve Notes.

      Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

      by neroden on Mon Aug 08, 2011 at 07:58:29 PM PDT

      [ Parent ]

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