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I know that the Federal Reserve is now the #1 holder of US treasury debt, but can someone please explain to me how it is that these "QE" events are supposed to stimulate the economy? I suppose that if the Fed is buying treasuries, then they're injecting $$$ directly into the government coffers, which gives the government more money to spend... While at the same time, bringing down the actual value of our dollars.

But how does that stimulate the private sector, or is it just the government spending that's supposed to spark increased private sector commerce?

I don't get it.

Mark

I don't know either, but it sounds like the Fed's idea of a twisted "trickle down" method, whereby they feed the banks billions(by way of counterfeit currency) and they(supposedly) pass it down to the consumers. Only problem is, the banks made a lot of bad bets in the past(mortgages, fraudulent security instruments)and use that money to pay those off(with profit of course) before the consumer sees any benefit.

I just got a letter from one of my credit card companies...they were "happy" to announce they have reduced the interest rate to 19.99%...obviously I don't keep any balance with them. Meanwhile my local bank is paying .05% on savings.

They don't call them banksters for noth'n...

For some reason, economists believe that the main problem with lending is lack of funds and not the deteriorating state of both public and private balance sheets all around the world. They believe in their own omnipotence and the absolute correctness of their outdated economic theories which are daily contradicted by this stupid thing called “reality”.

Well two fold.. lower interest rates for the government allow it it to continue to borrow money at really low interest rates and allow it to continue to spend money in massive deficits with very little consquence.

then with low interest rates you have set the bar low.. so in order to attract investment everyone else must lower the bar, companies and and consumers who can borrow at low interest rates may(and may is the key word) be inclined to borrow money that wouldn’t normally borrow and spend it on things. It is this spending that should spur the economy and produce additional econonic activity that would normally occur. Ideally this generates a cascade effect that pushes the economy forward.

So here’s the problem. Most people have a fear of negative economic development on top of higher future tax rates. why invest money or spend it if you in the future you know that your investment will get you little to nowhere and why spend money if you fear that your investments will be worth less in the future and thus cut into your income. If you are less likely to do these things than borrowing does not matter because you aren’t even willing to spend your own money.

can someone please explain to me how it is that these "QE" events are supposed to stimulate the economy?

The real goal is NOT to stimulate the economy. The real goal is to delay the collapse so that it occurs on somebody else's watch.