The Federal Reserve responded to the spectacular financial meltdown of 2008 by putting a bottom under the cascading financial prices. This was accomplished by buying, buying, and buying some more. Then when the downdraft of prices reached bottom, the Fed phased in additional largescale asset purchases with the intent of providing cash resources to banks in order to start the bank expansion and economic rebuilding process. This reduced interest rates to the most affordable of all times as a way to induce prospective borrowers to spend more money. All told, the Fed buying spree increased its balance sheet assets from … Continue reading—>
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