Hacker News Reader

They lent the money, they didn't "give it" to the banks. The difference is that the Fed got the money back, whereas buying $2tn of debt would result in the Fed having to create $2tn.

http://www.forbes.com/sites/traceygreenstein/2011/09/20/the-...

View on HN

Loaning someone money without interest is the same as giving them the market rate of interest, which in the case of the banks after the housing bubble bust was somewhere around a billion percent a minute, because all of the banks were insolvent and completely uncreditworthy.

To make it even more obviously a gift, a good bit of it was used to buy treasuries. If I loan you $100 at 0% interest, and you loan it back to me for $5 a day, aren't I just giving you $5 a day?

I think what he was actually getting at is the Discount Window. These are often very short term loans, perhaps a matter of minutes, made to cover a short term liquidity drop. If you add it all up over a year, it could very well add up to several trillions without adding those trillions to the GDP.

It all gets paid back with interest, though. None of this is anything new.

Reply on news.ycombinator.com