Financial News Story of the Day – Fed’s Quantitative Easing 3 Plan in Effect Soon
The Fed wants a third round of “quantitative easing,” which means that they’re planning to purchase mortgage-backed securities or buy up U.S. treasuries that no one wants. How much junk debt do they want to purchase? This time, it’ll cost tax payers an estimated $1 trillion. By printing more money, the Fed effectively makes each dollar you earn worth less. It’s one of the greatest forms of thievery ever invented. Not only that, the Fed is also intending to purchase assets from banks that will leave them solvent by removing the toxic debt from balance sheets.
The goal of introducing a large amount of dollars into the system would mean that lending institutions can borrow at discounted rates and pass that savings onto you, the consumer, which is reflected in lower interest rates on things like auto loans or mortgages. If you’ve been wondering why the 30-year mortgage is at a record low, quantitative easing is the answer (source: Finance.Yahoo.com).
Excerpt: “The $1 trillion price tag – Citigroup economists a few weeks ago also envisioned QE3 at that level – is significant in that it will send the Fed’s balance sheet to about $3.9 trillion and likely spark a war with Congress over the threat of inflation.
But the recent easing of inflation pressures, combined with dithering of Congress, sets a delicate stage for the Fed to take the political risk.”
Daily Finance Summary – Fed Eases, Google “Disappoints,” and Stocks Enjoy Lift
- The Federal Reserve will likely announce another round of quantitative easing with a price tag of $1 trillion
- Google’s earnings were up 27%, but “disappointed” analysts as it was not as high as forecast
- Stocks enjoyed a moderate up day on moderate financial news
- GM regains its spot as the top automaker in the world, beating a disaster-struck Toyota
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