I understand that when the FED buys something, this essentially leads to an expansion of the money supply. I also feel I have a pretty solid grasp about how the mechanics of this work when they are buying treasuries, but not so much when they buy mortgage backed securities as they are here.
Is this virutally the same, just targetting which industry gets the money first? Or does it work in a different way?
Also, I know in the past they have purchased MBS’s for very short periods of time before they had to sell them back, but from what I’ve read it looks like they may just be holding on to them this time around, am I wrong?
Thanks for the input on this!