"The Fed plans to create money, essentially out of thin air, and then pump it into the economy by
buying Treasury bonds on the open market. These purchases are to be finished by the end of June, the Fed said."
Fed to buy $600 billion in bonds in effort to boost economic recoverywww.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110305412.html
Thursday, November 4, 2010_______________________________
www.usatoday.com/money/economy/2010-11-03-fed-bond-buying-plan_N.htm
November 3, 2010
[ emphasis added ]
The Federal Reserve is making a bold effort to invigorate the economy by announcing it will buy hundreds of billions more in Treasury bonds.
The Fed says it will buy $600 billion of long-term government bonds by the middle of 2011 to further drive down rates on mortgages
and other debt. This will be in addition to an expected $250 billion to $300 billion in 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 says it will review whether adjustments are needed
depending on how the economy is performing.
Some worry the Fed action will do little to boost the economy because interest rates are already historically low.
Others fear the bond purchases could drive inflation too high over the long term and unleash speculative buying in assets like stocks.
IMPACT: What it means for stock and bond investors, savers
FED STATEMENT: Read what the FOMC said
FED'S BIG GAMBLE: Here's what could go wrong
continued...
_____________www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110305412.html
By Neil Irwin
Washington Post Staff Writer
Thursday, November 4, 2010; 12:31 AM
[ emphasis added ]
The Federal Reserve escalated its efforts to get the U.S. economic recovery back on track Wednesday, again entering the realm of risky
and untested policy in response to the worst downturn in generations.
The plan to pump $600 billion into the financial system is designed to stimulate the economy in large part by lowering mortgage and
other interest rates.
Although the approach carries significant risks for both the economy and the central bank's credibility, the steps announced by Fed policymakers
could represent the nation's best hope for breaking free of sluggish growth, especially with bold initiatives unlikely from a newly divided Congress.
Fed officials concluded that growth is too slow to bring down the 9.6 percent unemployment rate and is at risk of staying that way for some time
absent new action. They were also concerned that inflation has been running too low [ CCL: ??? ] and were looking for a way to
encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and
help energize the economy.
"The pace of recovery in output and employment continues to be slow," the Fed's policymaking panel, the Federal Open Market Committee, said in a statement. "Employers remain reluctant to add to payrolls. Housing starts continue to be depressed."
The Fed usually manages the economy by adjusting short-term interest rates. With those rates already near zero, Fed officials had to dust off
a strategy for boosting the economy that debuted during the darkest days of the financial crisis. The Fed plans to create money,
essentially out of thin air,
Using this technique, called "quantitative easing," the Fed bought more than $1.7 trillion in securities during the financial crisis and in its
immediate aftermath. The central bank's holdings jumped to their current level of $2.3 trillion, and the figure will approach $3 trillion
when the new purchases are complete. This new wave of bond buying is a dramatic turnabout for an institution that just six months ago, amid
a false spring in the economy, was weighing how it would begin unloading all the securities it had purchased.
continued...
______________
http://blogs.reuters.com/felix-salmon/2010/11/04/bernanke-explains-qe2/ Felix Salmon
Nov 4, 2010 09:10 EDT
Ben Bernanke might not be giving Trichet-style press conferences, but he is at least taking to the op-ed page of the Washington Post
to explain yesterday’s decision. Here’s what he’s trying to achieve with his quantitative easing:www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html?hpid=topnews
continued...
____________
www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html?hpid=topnews
By Ben S. Bernanke
Thursday, November 4, 2010 Two years have passed since the worst financial crisis since the 1930s dealt a body blow to the world economy. Working with policymakers
at home and abroad, the Federal Reserve responded with strong and creative measures to help stabilize the financial system and the economy.
Among the Fed's responses was a dramatic easing of monetary policy - reducing short-term interest rates nearly to zero. The Fed also purchased
more than a trillion dollars' worth of Treasury securities and U.S.-backed mortgage-related securities, which helped reduce longer-term interest rates,
such as those for mortgages and corporate bonds. These steps helped end the economic free fall and set the stage for a resumption of economic growth
in mid-2009.
Notwithstanding the progress that has been made, when the Fed's monetary policymaking committee - the Federal Open Market Committee (FOMC) -
met this week to review the economic situation, we could hardly be satisfied. The Federal Reserve's objectives - its dual mandate, set by Congress -
are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate
is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months
or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills.
continued...
The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates
already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009.
The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal
on its holdings of securities, as it has been doing since August.
continued...
The writer is chairman of the Federal Reserve Board of Governors.
__________________WND MONEY
WorldNetDaily ExclusiveBachmann: I begged the Fed not to do it
';Does anyone honestly believe adding inflation would be a good thing?'
--WND
www.wnd.com/index.php?fa=PAGE.view&pageId=223665___________________WND.ARCHIVES, MARCH 19, 2008
WorldNetDaily ExclusiveBernanke: Federal Reserve caused Great DepressionFed chief says, 'We did it. ... very sorry, won't do it again' --WNDwww.wnd.com/index.php?fa=PAGE.view&pageId=59405
___________________
What Fed's $600 billion plan really meansMove should be good for borrowers but particularly bad for 1 group--Yahoo!Financewww.wnd.com/index.php?fa=PAGE.view&pageId=224245
___________
_
'Hot money': China blasts anticipated flood of dollars';Outcome will be what knowledgeable Westerners dread: Yet another crisis is inevitable!" --Associated Presswww.wnd.com/index.php?fa=PAGE.view&pageId=224129
_____________Steve Lefemine
November 6, 2010
To unsubscribe, send "Unsubscribe" to:
Columbia Christians for Life <CCL@ChristianLifeandLiberty.net>What the Fed did and why: supporting the recovery and sustaining price stabilityBernanke explains QE2and then pump it into the economy by buying Treasury bonds on the open market. These purchases
are to be finished by the end of June, the Fed said.Fed to buy $600 billion in bonds in effort to boost economic recoveryFed launches 2nd bond-buying spree to stimulate economy
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