That means companies that have sold bonds may use the proceeds to invest in other companies or lend to individuals.
More demand from the Fed raises the price. But these accounting deficits would not increase national debt burdens, since they would be financed by issuing new money, at zero cost to government or to future generations, instead of selling interest-bearing government bonds.
If it all goes to plan that effect can filter through the economy and reduce interest rates for many borrowers. At this point it's important to note what type of money the Fed has been creating. It would also have the effect of further lowering interest rates.
It has no stimulative effect, but nor is it inflationary.
Image copyright Reuters Image caption Borrowers gained from a combination of low interest rates and QE Then there is the idea that QE punishes savers, by driving down interest rates, while it rewards borrowers, some of them irresponsible ones. From now on they get nothing.
These are external links and will open in a new window Close share panel Image copyright Getty Images One of the biggest economic experiments of our age is coming to an end. It shows the changing level of what is called the monetary base.