Prof Cochrane says: "QE is when a central bank buys a large amount of Treasury debt and issues in return interest-paying reserves, which are overnight government debt." And: " The banks simply gave the Fed Treasuries and took interest-bearing bank reserves in return and sat there." But he is ignoring the more important half of the QE transaction, namely the creation of new money. If an investor sells a Treasury to the Fed, the investor gets a new bank deposit, brand new money that never existed before. There is now more money (M2) to deploy in the investment market, and there are fewer investments available because the Fed took out the Treasury. Why do people think it's a mystery that bond and stock prices rise during QE? If the Fed bought cars, the supply of cars would decline and the money chasing those cars would rise. The price of cars would have to rise. Why do so many economists ignore the money creation that occurs during QE? The addition to bank reserves is a sideshow, not important in raising asset prices.