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Thread: Federal Reserve Plans to Buy Government Debt

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    Federal Reserve Plans to Buy Government Debt

    Ah geez. Well at least we know what all the distraction tactics were about.

    Shock and awe today from the Federal Reserve. The central bank surprised the financial markets, announcing it'll buy up to $300 billion in longer-term Treasuries over the next six months. This is the first time in more than 40 years the Fed has purchased government debt. As the Fed wrapped up its two-day policy meeting, it also said it will purchase an additional $750 billion of mortgage-backed securities. Add it all up. The Fed is pumping more than $1 trillion into the economy. It hopes this cash injection will boost the economy, making more money available to consumers and businesses. Scott Gurvey reports on the central bank's big gamble.
    Nightly Business Report . Federal Reserve Plans To Buy Government Debt | PBS

    WASHINGTON (Reuters) The U.S. Federal Reserve on Wednesday, in a surprise move, said it will buy up to $300 billion worth of longer-term U.S. government debt over the next six months and expand purchases of mortgage-related debt to help ease credit market conditions.

    In a statement at the end of a two-day meeting, the central bank's policy panel also said it had decided to hold its target for overnight interest rates in a zero to 0.25 percent range -- the level reached in December.

    It said rates would stay low for "an extended period," a more explicit vow to stay on hold for a prolonged time.

    "In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the Fed said.
    Fed to buy long-term U.S. government debt

    I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
    Thomas Jefferson, (Attributed)
    3rd president of US (1743 - 1826)





    Fed to buy long-term U.S. government debt

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    Re: Federal Reserve Plans to Buy Government Debt

    IT'S an ominous day when the world's economic superpower starts printing money to buy its own government's debt.
    Federal Reserve's move to print money shows perilous policy failure | The Australian

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    Re: Federal Reserve Plans to Buy Government Debt

    the United States will buy its own bonds, through the offices of the Federal Reserve.
    The Fed is not literally printing money for the economy with this move. It is initially a book entry, as the Fed credits the accounts of the banks it buys bonds from. But in the long run the Fed is creating money, and the threat, exposed in Germany after World War I and more recently in Robert Mugabe's Zimbabwe, is a breakout of inflation.
    US clutches at bond buy-up in effort to rescue economy

    It's good to know that all of Congress right now is working on flogging AIG employees.

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    Re: Federal Reserve Plans to Buy Government Debt

    Gold rallies as dollar tumbles after Fed's decision
    By Moming Zhou & Laura Mandaro, MarketWatch
    Last update: 4:05 p.m. EDT March 18, 2009
    Comments: 656
    NEW YORK (MarketWatch) -- Gold futures rallied more than 6% in electronic trading Wednesday, as the dollar tumbled after the Federal Reserve surprised investors and said it will buy long-term Treasurys, raising gold's appeal as an investment alternative.
    By buying Treasurys, the Fed is essentially creating more money to buy national debt, which weighs on the dollar. The rally in gold came after the metal lost 3% to end at a two-month low in floor trading, which ended before the Fed's announcement.
    http://www.marketwatch.com/news/story/Gold-rallies-6-dollar-tumbles/story.aspx?guid={2D07948D-5835-4E62-A9F2-249D7504917B}

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    Re: Federal Reserve Plans to Buy Government Debt

    US Federal Reserve cranks up printing press

    The Federal Reserve last night flashed back almost 50 years to a campaign code-named "Operation Twist", as it announced the purchase of longer-dated Treasury securities to help end a deepening US recession.

    In a decisive escalation in its campaign to restore growth, the Fed said it would buy up to $US300 billion ($440 billion) of longer-dated Treasuries over the next six months and buy another $US850 billion of mortgage securities.

    Economists said the bold move was warranted by a worsening economic outlook, but also carried the risk of inflation in the future, unless the Fed was very careful.
    US Federal Reserve cranks up printing press - Business - BrisbaneTimes

    This is big news. How come no one is interested in it?

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    Re: Federal Reserve Plans to Buy Government Debt

    Stocks are rallying, bonds are soaring, and your mortgage rate could fall again now that the Federal Reserve has agreed to take on billions worth of new Treasuries and other securities to support the ailing economy.

    Don't be fooled: The Fed's decision is a reason to worry.

    The decision today to buy $300 billion worth of long-term Treasuries over the next six months and expand existing lending programs by another $750 billion is actually a little scary. Precisely this sort of action was long considered a last-resort arrow in the Fed's quiver. But as the Fed said in its statement, the economy has continued to contract since January. With interest rates close to zero and available options dwindling, the Fed's move simply shows central bankers think the crisis is continuing.
    Fed's Bond Buy Signals Crisis - The Ticker (usnews.com)

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    Re: Federal Reserve Plans to Buy Government Debt

    With mortgage rates already hovering at record lows, the Federal Reserve on Wednesday moved to force them still lower with a dramatic $1.2 trillion expansion of its debt-buying programs.

    The central bank said it would start buying up to $300 billion in Treasury bonds as well as another $850 billion in mortgage bonds from Fannie Mae and Freddie Mac - a move sure to drive 30-year rates of less than 5 percent still lower.

    Although the move was an elixir for the economy and markets, it risked stirring controversy because the central bank has essentially started printing money to help finance federal deficits exceeding $1 trillion this year and next.
    Washington Times - Mortgage rates: How low can they go?

    Exactly. It should stir controversy. Why isn't it? How can people care more about AIG or the pope and condoms than this?

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    Re: Federal Reserve Plans to Buy Government Debt

    While I'm not one to be an alarmist, I can't help but wondering if complete financial collapse is inevitable. Everything the government does has the air of either a pyramid scheme, a college freshman about to be burried by a growing mountain of credit card debt, or outright fraud. It just doesn't seem possible that a financial system that operates in this way can sustain itself. When the traditional methods of creating money out of thin air aren't enough anymore that should be a hint that you're doing something incredibly, incredibly stupid. I can easily see the 'moronic assumption of the day' going from 'housing prices always go up' to 'the US governemnt can always issue more debt.' It's a stupid assumption, but it's one that we are currently making, and if it ever becomes false we're in for a hell of a ride

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    Re: Federal Reserve Plans to Buy Government Debt

    My biggest concern is that the people are so easily distracted. This move by the fed was big, bold, and incredibly risky. Folks should be talking about it but they're not. We're frighteningly stupid as a population. We have a ton of threads on AIG and not a peep on this which is far more monumental, worthy of debate, and absolutely deserving of discussion. It's mind boggling.

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    Re: Federal Reserve Plans to Buy Government Debt

    yikes

    Human Taxidermist - - now offering his services for all your loved ones
    Quote Originally Posted by jallman View Post
    How the hell did you just tie in a retroactive reparative measure with a proactive preventative measure. Not even close to being the same thing.

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