[RT] Fed and Liquidity

[user <buchach@xxxxxxxxxx>]

This may be a simple question, but I would be grateful if any of you
that understand the process could explain how the Fed increasing
liquidity and the money supply can potentially affect the stock market
by making money more easily available, and vice versa.  What I am trying
to understand are the simple mechanics of it, the flow of funds from the
Fed to the banks and ultimately to the market - how does making more
money supply available encourage more borrowing, if the interest rates
have not actually been lowered?  This all would make more sense to me if
the Fed had lowered rates, ie, borrowing becomes cheaper, but the
interest rates were actually raised this fall.

Thanks, Dan