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.

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