The average quality of the assets backing the dollar (the assets held by the Fed) deteriorated at an even faster pace after September 2008. There was a substantial expansion of the balance sheet through an increase in the monetary base.
The increase in emergency credit programs was financed mainly by (excess) bank reserves and by accounts of the Treasury held at the Fed. A new stage in quantitative easing was reached when, in the spring of 2009, the Fed started buying government bonds, agency debts and mortgage-backed securities directly.
The Problems of Exit Strategies
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