[neffy]

I'm arguing supply and demand.

If the Fed comes along and buys loans from the Banking system it increases the supply of loans... (banks are restricted by Basel Capital regulation in the supply of loans they can provide, otherwise too much liability money creation.)

If they buy loans from anybody else - since the Fed creates money to do so (by virtue of also being a bank), they again potentially increase the supply of loans, if the lenders then relend the money.

And the total quantity of debt goes up, its price goes down, and everybody wonders why.