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When the Fed buys long-term Treasuries under QE and issues overnight debt, the result is equivalent to the Treasury having issued overnight debt.
Drawn from what John H. Cochrane said
What John H. Cochrane actually said
Word for word, with the source under each one. They did not write this page.
Economist at the Hoover Institution
In QE, the Treasury issued long-term bonds. The Fed bought up the long bonds, issued overnight debt, and passed the interest difference back to the Treasury. In the end, it is just as if the Treasury issued overnight debt in the first place.
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Added to korrents 19 Sept 2026 · How quotes work · Something wrong? Tell us
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