Quote:
Originally Posted by Tyrone Slothrop
It increases BofA's liquidity only relative to a hypothetical world in which they can't sell their bonds to anyone else, but no one thought that was the world we're in. The key is that if anyone else had bought the bonds, they would have had to tie up other assets to do so, but not the Fed, increasing the supply of money.
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In any scenario, the institution selling the bonds will not be lending the resulting liquid to domestic businesses who aren't seeking loans or to underwater homeowners seeking refis. The money will look for returns abroad. The devaluation will boost export markets, and maybe that will create enough activity to spark some form of hiring, but it seems unlikely given the lack of response last time.
