The fed bought 700 billion in treasure securities and 200 billion in MBS. How did that help to “stabilize” the market?

by enginerd03

 

  1. banks have a lot of treasuries
  2. banks do not have a lot of cash
  3. businesses need cash to operate
  4. banks cant give them cash, because banks have a lot of treasuries
  5. fed buys treasuries from banks, giving them cash.
  6. banks have cash
  7. banks can give cash to businesses in the form of loans.

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(its obviously more complex, but thats the watered down version of it)