Here are the key paragraphs from today's Fed announcement...
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
The Fed just changed the game.
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2 comments:
Oh....we'll see a bump up initially. But when you keep printing money out of no where the inflation will eventually be out of control. An example would be if today you have 1 dollar but bread is 2 dollars, tommorrow you may have 7 dollars but bread is 20 dollars. Wages will go up but they won't go up as high or as fast as inflation. On the surface this may seem good but it's a ploy to keep the top bankers wealthy and the rest of us slaves to the banking system. The key is to stop spending what we don't have. Cut the over bearing regulations on manufacturing in this country and bring manufacturing home where it belongs.
This is not anything different except it buys time for Obama until he can drop the January 31 bill in our laps 10 days after Romney takes office and call it his fault! It's just plain the same game with a twist, as in do ending date. It is only aimed at the real estate market and depends on people buying existing merchandise, such as lend and houses. Nothing to develop manufacturing of anything.
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