A free $2 Trillion

“The Fed has kept short-term interest rates near zero since December 2008 and has bought more than $2 trillion in long-term securities to push borrowing costs down further and boost recovery from the 2007-2009 recession.”  (Fed unlikely to extend QE2, officials say by Ann Saphir (Reuters – 03/25/11)

The Federal Reserve was able to buy $2 trillion in long-term securities.  This is amazing consider that GDP is right around $14 trillion (Google) and the 2010 US Federal Government is $2 trillion (wikipedia.org).  Where does the Federal Reserve get that $2 trillion from?  (From what I’ve read, it seems it just gets it out of thin air.) The ability to pump this amount of money into the economy is just extraordinary. 

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