Babylon...
The open market purchases are designed to send the market up, not down. As excess money is put into the system daily, I suspect that there is an agreement on basically how the money is to be put to work in the market (no shorting allowed, mostly to be used on index futures and stocks). I also suspect that they have gentlemen's agreements with both Europe and Japan for them to be doing pretty much the same thing.
The negatives are mostly in the longer term. In the short term it is theoretically possible to do what I posited may be the goal - reinflation of the market to rebuild wealth. The short term danger would be if they were unable to do in practice what looks possible in theory. If the markets were to tank anyway, it might produce the very meltdown they were initially trying to prevent. The other short term negative is that it could cause a loss of faith in the dollar and a run on it could ensue, which would cause severe problems. A slow drop in the dollar is desirable for us (other countries want the same thing for their currency) but a rapid drop would be very harmful worldwide.
The longer term dangers are mainly that interventions and artificial supports almost always fail in the long run - at some point they have to stop supporting or the market just overwhelms the support. If the underlying problems are not fixed, the downside can be worse than it would have been.
That would be my fear.
mlsoft
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