Can you please explain what exactly happens when the Fed injects billions of dollars of liquidity into the banking system? Where do the billions come from? Does the money come from tax dollars? Where does the money go to? Does it go to places like Goldman Sachs? Does it get spread across all types of banks including regional banks? What does a bank do with the money when it gets it? At some point, does the Fed run out of reserves, or does it just print more?
-- Steve G.
Great question, Steve. I don't know the answer myself. Fortunately for both of us, our sister network MSNBC tackled a very similar question. The link to that post is below. And I also included a link to CNBC Head Economics Correspondent Steve Liesman's appearance on "Fast Money" in case you want to hear more.
-- Lee Brodie
> How Does The Fed Inject Money Into The System?
(from MSNBC) Right now I can't make the link work... so just cut and paste this URL. That should do the trick!
http://www.msnbc.msn.com/id/20218020/
> The Fed's Next Move?
(from Friday's Fast Money)
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