/biz/ - Business & Finance

Miss me yet?

>>17843737
banks buy bonds from the government, and resell those bonds at higher interest to make money
when the economy goes bad, people tend to borrow less, this is bad because it shrinks the money supply, which causes deflation
so the FED lowers interest rates and BRRRRs 1.5trillion into existence, to buy back their own bonds from the bank.
the banks now have money to borrow out a lot, and the lower interest encourages more people to borrow money, avoiding deflation
the reason why /biz/ goes REEE at the thought of this is because they suspect that too low interest rates and too much BRRRing will cause a lot of inflation, which eats away at their investments.

y-you didn't forget about me a-anon?