QE2 Explained, Fed Buys Treasuries From Banks (Marketplace Video)

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To prep ya'll for the potential of QE3. Paddy Hirsch, Senior Editor at Marketplace, explained how QE2 (quantitative easing part 2) works in the video below (from 10/07/2010). In summary: The Fed buys Treasury bonds from the banks which, in turn, gives banks a fresh wad of cash reserves to lend. As money gets lent out, it's supposed to stimulate the economy. I'd like to see a video explaining how QE2 makes stocks rally. I'm posting a chart comparing Treasury yields and the S&P next.




Uncle Ben goes shopping from Marketplace on Vimeo
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Related:

Jon Stewart: The Fed Isn't Printing Money, It's Imagineering Money (Daily Show Clip), Morgan Stanley Explanation (BASE, M2, MZM) (12/9/2010)

Quantitative Easing Explained, "The Deflation is Very Bad" (Cartoon) (11/13/2010)

Bernanke at Jacksonville University on Commodity Price Increases, Fed Balance Sheet and How They Aren't Printing Money (11/5/2010)