Quantitative easing kept debt servicing ratios low, and credit easing kept spreads low on everything from mortgages to high-yield high-grade commercial paper.

This is a causal and descriptive claim about the post-2008 and pandemic era up to Oct 2022. True: the data and mainstream research (Fed, BIS, academic studies) show low debt-service ratios during the QE periods (for example, the Fed's household and/or corporate debt-service-ratio series near historic lows) and attribute this substantially to QE holding down rates; and they show narrowed spreads on mortgages (MBS/mortgage-Treasury), corporate debt (high-yield and investment-grade) and commercial paper during the Fed's credit-easing facilities (MBS purchases, CPFF, PMCCF/SMCCF), with research crediting those programmes. Mostly true: both effects are well supported but one asset class named (for example commercial paper) shows a weak or temporary effect. Mixed: one half (debt-service ratios or spreads) is supported and the other is not. Mostly false: the outcomes occurred but the evidence attributes them mainly to other causes, so the causal claim is overstated. False: debt-service ratios or spreads were not low in those periods.

Set before the research began.

1. E1 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “The large-scale GSE MBS purchase program was an integral component of the "credit easing" by the Federal Reserve, which focused on using the asset side of the central bank's balance sheet to eliminate illiquidity and abnormally high credit spreads in financial markets.”

2. E2 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “Once the Federal Reserve's MBS program started purchasing MBS, we estimate that the abnormal risk premiums embedded mortgage rates decreased roughly 50 basis points.”

3. E3 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “Our results suggest that around half of the declines were associated with improved market functioning and about half with declines in risk premiums that were associated with changes in the compensation for holding fixed-rate financial assets over a long period.”

4. E4 The Commercial Paper Funding Facility - Liberty Street Economics Federal Reserve Bank of New York (Liberty Street Economics) · 15 May 2020

   “the spread on nonfinancial commercial paper declining from 112 basis points (bps) on March 17 to 5 bps on April 16, and the spread on financial commercial paper declining from 38 bps on March 17 to 0 bps on April 16.”

5. E5 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “Our pricing models suggest that the announcement of the program, which signaled strong and credible government backing for mortgage markets in particular and for the financial system more generally, reduced mortgage rates by about 85 basis points between November 25 and December 31, 2008, even though no MBS had (yet) been purchased by the Federal Reserve.”

6. E6 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “Once the Federal Reserve's MBS program started purchasing MBS, we estimate that the abnormal risk premiums embedded mortgage rates decreased roughly 50 basis points. However, observed mortgage rates declined only slightly because of generally rising interest rates.”

7. E7 Did the Federal Reserve's MBS Purchase Program Lower Mortgage Rates? Board of Governors of the Federal Reserve System (FEDS working paper) · 5 January 2011

   “it is apparent that the MBS-Treasury spread is somewhat level during the "normal" era, persistently declines during the "subprime dominance" era, rises sharply during the financial crisis, and then declines to a level consistent with the "normal" era after the Federal Reserve's intervention.”

8. E8 The Impact of the Corporate Credit Facilities - Liberty Street Economics Federal Reserve Bank of New York (Liberty Street Economics) · 1 October 2020

   “We document a dramatic reduction in average duration-matched spreads—that is, spreads to Treasuries with similar timing of interest and principal payments—of 140 basis points in the three months after the initial announcement of the facilities.”

9. E9 The Impact of the Corporate Credit Facilities - Liberty Street Economics Federal Reserve Bank of New York (Liberty Street Economics) · 1 October 2020

   “Decreases in market expectations of default within one year were smaller, suggesting a significant role for improved attitudes toward risk.”

10. E10 The Impact of the Corporate Credit Facilities - Liberty Street Economics Federal Reserve Bank of New York (Liberty Street Economics) · 1 October 2020

    “The direct impact of the facilities was to improve bond market functioning, reduce default probabilities and reverse some of the dramatic increase in bond spreads prior to March 2020.”

The spreads half of the claim has independent support. Federal Reserve staff research finds that MBS purchases lowered the abnormal risk premium in mortgage rates and that the MBS-Treasury spread fell back to normal-era levels (E2, E7), although only about half of the decline is attributed to risk premiums (E3). Commercial paper spreads fell sharply after the CPFF (E4), and corporate bond spreads fell 140 bp after the corporate credit facilities were announced, with the facilities credited for part of that fall (E8, E10). None of the evidence covers debt-service ratios or links them to QE, so the first half of the claim cannot be confirmed or refuted, and the criteria cannot be applied in full.