The Real Risk-Takers Are at the Federal Reserve
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Feb. 14 (Bloomberg) -- Ever since the U.S. Federal Reservelowered its benchmark rate almost to zero and embarked on aseries of large-scale asset purchases, Chairman Ben Bernanke hasbeen using his pulpit to explain how it all is supposed to work.
In a nutshell: The Fed buys risk-free Treasury securities,depressing the yields. The public is goaded into buying riskierassets, such as stocks and corporate bonds, sending those priceshigher. Businesses financing themselves with equity have moremoney to invest. Consumers feel wealthier and spend more.