Comment by dash2
In theory this could be true. Is the US government actually doing anything specifically to prop up equity values?
In theory this could be true. Is the US government actually doing anything specifically to prop up equity values?
Okay, but this shows that they made massive acquisition in 2020 (presumably at the bottom of the market in response to COVID) and are now unwinding
When the Fed purchases bonds, that reduces interest rates, and lower rates make asset prices go up.
The Fed purchases the bonds with cash created out of thin air with a journal entry. That newly created cash is used by private actors to purchase assets, which makes asset prices go up.
The Fed could purchase equities directly, but it doesn't have to own them to influence their prices.
The federal reserve has 7x the assets it had in 2009: https://www.federalreserve.gov/monetarypolicy/bst_recenttren...