Econbrowser: Sterilized quantitative easing:
More fundamentally, one might ask what good does it do for the Fed to borrow short and lend long? The net effect should be to put downward pressure on long-term rates in the hopes that this might boost home purchases, help households strengthen their balance sheets with refinancing, and encourage investment and net exports. A realistic assessment I think would say that the effects of borrowing short and lending long are likely to be pretty modest, particularly given that the U.S. Treasury has been issuing long-term debt faster than the Fed can buy it. My conclusion is that measures such as QE2, insofar as they had an effect, operated primarily as a tool the Fed can use to punctuate its declarations of near- and longer-term policy objectives.
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