Can you explain how will purchasing government bonds reduce long-term interest rates and revive economies growth? I would truly appreciate if you cold explain it in lay terms.
"Buying US treasuries sends treasury prices higher and yields lower, dropping the interest rate used to set all manner of consumer and business lending, from mortgages and credit cards to working capital loans. The expectation is that lower lending rates will support consumer spending, particularly when it comes to mortgage refinancing. The move is intended to stabilize the housing sector by allowing troubled homeowners to refinance at more affordable rates, breaking the cycle of defaults and foreclosures and lending to lower home prices, which lead to more defaults and foreclosures. More solvent homeowners may also take advantage of lower interest rates to refinance, generating more monthly savings that may translate into higher personal spending. In short, the hope is that lower borrowing costs will generate higher consumption." - I can't quite remember the source..
