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American Capital Agency Corp. Message Board

  • pappa_korn pappa_korn Dec 5, 2012 6:24 PM Flag

    Question About QE

    This is a question about something I have never understood, and may show my ignorance.

    When the Fed's undertake these huge multi-billion dollar QE purchasing programs of buying MBS and Treasuries, where does the government get the money to make these purchases?
    Does the government actually print more money? This dilutes the value of the dollar and should be inflationary, but does the government nevertheless actually increase the money supply by cranking up the printing presses?
    If the government actually prints more money to increase the supply of money then the economy truly is in much worse condition than most people realize, as in effect the government is merely adding "play money", an artificial stimulus that does not address the underlying problems. Surely Wall Street understands this, but they appear to be going along with this game playing, as the markets are holding up OK. Why?

    Respectful comments appreciated.

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