Federal Reserve to scale back stimulus by $10 billion

[Igel]

5. Most of the QE has gone for two things.

The first is Treasury Bills, helping to keep demand high. If demand slips, then the interest rate has to increase to entice more buyers.

The result of that is lower interest rates on federal debt.I.e., making borrowed money cheap. And reducing the interest paid on the national debt.


A slightly larger amount--possibly because this buying program started a bit earlier--has been for mortgage backed securities. This helps to keep mortage interest rates low, keep lots of money in the mortgage pipeline, and encourage having house sales increase, housing prices stabilize and even increase. This also almost certainly helped Fannie Mae and Freddie Mac turn a larger than expected profit.


These are three big successes that the Obama administration and many DUers really like. They're Bernanke's work, sad to say.

Early on there were substantial stock purchases, although I doubt they were made randomly. Other kinds of bonds were also bought, esp. junk mortgage bonds.