Excerpt from FRB Chicago page dated 6/15/2009-Nontraditional Monetary Policy* - Federal Reserve Bank of Chicago.

Nontraditional Monetary Policy* - Federal Reserve Bank of Chicago: "Because of these limitations, the Fed has turned to nontraditional policies. These can be broadly categorized in three groups. The first group expands on something that has always been a part of our policy toolkit, namely discount window lending through which the Federal Reserve Banks make short-term loans to depository institutions against adequate collateral. Since August 2007, the Fed has taken steps to encourage the use of the discount window as a source of liquidity, including reducing the discount rate and lengthening the terms of the loans. The second group of policies consists of opening new lending facilities to a wide array of participants in financial markets. One can think of it as a sort of discount window for financial actors who are not depository institutions. The third group of policies consists of large-scale purchases of GSE notes. This can be seen as an extension of traditional open-market operations: the Fed still exchanges reserves for bonds, but on a vastly different scale."

Bernanke announced today the relaunch of the above NT Policy moves.

QE3 is already here!

'via Blog this'