I would especially like to thank Professor Francisco Gonzales for thinking of me for today’s talk. Francisco and I have known each other for almost 20 years and have discussed many economic issues during that time.
The Federal Reserve has funded its securities purchases by crediting the accounts that banks hold with us. In explanations of our actions during the crisis, we have focused on the effects of our purchases on the prices of the assets that we bought and on the spillover to the prices of related assets, as I have just done.