How does fed add liquidity to the financial markets?

Discussion in 'Economics' started by mark77418, Aug 10, 2007.

  1. Can anybody please explain this.
  2. just21


    They lend money to banks when the banks will not lend to each other.
  3. Here you go:

  4. lassic

    go here, I cant explain. can get emails daily. for today, just headlines

    Temporary OMO: Fed adds $19.00 billion with 3 day RP


    Temporary OMO: Fed adds $16.00 billion with 3 day RP

    tried to track with daily movements but gave up after couple weeks, found no correlation but two weeks is not enough data to test, so take it what it's worth
  5. just to calm it down till Monday eh?
  6. Just to calm it down till GS can liquidate some funds might be more accurate.
  7. the fed. purchases treasuries or other interest rate instruments from the banks for dollars with a promise to repurchase them in the future as liquidity needs change
  8. Sounds like Dinosuars' explanation of trickle down economics:
    Rich people live in big houses on top of hills.
    If rich people pay less tax they will have lots of extra money in their pockets.
    That money will then spillover out of their pockets and roll down the hills to where the poor people live.
  9. :D
  10. Most likely, they create more money with a ledger entry and then distribute it electronically. Being the private banker to a country is a sweet gig if you can get it. Do no work, make all the money.
    #10     Aug 10, 2007