The Fed just announced open-ended large-scale asset purchases (LSAPs), or quantitative easing (QE), and is planning to buy $125 billion in Treasury and agency mortgage-backed securities (MBS) every day this week. Quantitative easing increases demand for longer-term Treasuries or MBS, pushing up their price and lowering long-term risk-free interest rates—a way to further stimulate economic activity after short-term (overnight) federal funds rate was abruptly lowered to zero on Sunday, March 15. This is more aggressive than any of the QE policy announcements the Fed made in 2008-09.

The Fed has moved quickly and aggressively, but the onus is now on fiscal policy, and Congress isn’t displaying the same sense of urgency…