Commentary
Previously, I explained how the Fed’s policy of buying and selling securities impacts interest rates and stock prices. The biggest change in purchases (or sales) in securities occurred from mid-2007 through mid-2008. Then, the Fed sold 40 percent of its holdings of securities. The move reduced this component of money back to 1999 levels. This lack of money produced a liquidity shortfall, a collapse stock prices, and a collapse in the economy.
