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Fed To Buy $600 Billion In Bonds To Aid Economy

Wednesday, November 3, 2010 - 4:59 PM
Fed to buy $600 billion in bonds to aid economy - Yahoo! Finance=
WASHINGTON (AP) -- The Federal Reserve announced a bold plan Wednesday to try to invigorate the economy by buying $600 billion more in Treasury bonds. The Fed said it would buy about $75 billion a month in long-term government bonds through the middle of 2011 to further drive down interest rates on mortgages and other debt.

This is in addition to an expected $250 billion to $300 billion in Fed purchases over the same period from reinvesting proceeds from its mortgage portfolio.

The idea is for cheaper loans to get people to spend more and stimulate hiring. The Fed said it will monitor whether adjustments are needed depending on how the economy is performing.

4
MikeMike327 posts since
Feb 22, 2010
Rep Points: 875
1. Thursday, November 4, 2010 - 8:37 AM
The key words are "it will monitor whether adjustments are needed..." That means if people don't borrow or spend, and the jobs picture doesn't get much better, the Fed will just keep on with the quantitative easing (QE). By the time QE5 or 6 rolls around the Fed will pay you to borrow money and deposit rates at banks will be negative 2%. By then the dollar will be so devalued no one can buy anything anyway. But, by gosh, the Fed will have gotten all those pesky savers to put all their funds into the stock market in the hope of generating some decent income stream. Pity though. The big boys like Goldman Sachs will have shorted the market, by then, and the saver's portfolio will go into the toilet.

 
3
PurplesagePurplesage26 posts since
Oct 11, 2010
Rep Points: 75
2. Thursday, November 4, 2010 - 8:42 AM
By the way, Robert Reich is right on the mark with his November 3, 2010 post to his blog site.

http://robertreich.org/
3
PurplesagePurplesage26 posts since
Oct 11, 2010
Rep Points: 75
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