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Opinion
Matt Levine

The Fed Will Buy Bond ETFs Now

Also private stock exchanges, mercenary fundraising and Elon Musk.

Programming note: Money Stuff will be off tomorrow, back on Thursday.

Loosely speaking the way conventional monetary policy works is that the central bank makes money cheaper (or more expensive) generally, and then the economy and the financial system work out what that means specifically if you want money. If the Federal Reserve lowers interest rates by 0.25%, then risk-free short-term interest rates will be lower by about 0.25%, but long-term interest rates and credit spreads might go up or down for different tenors and credit ratings and specific borrowers and, like, your credit card or whatever. The Fed tweaks short-term risk-free interest rates, which are a basic input in the algorithm of the economy, but the algorithm works on its own to translate that input into millions of specific outputs.