By Douglas V. Gibbs
The theory is that one more influx of fiat money will encourage people to buy goods, kick start the economy, and bring down the unemployment rate. To do this, they will in effect start printing more money by purchasing mortgage backed assets - the same kind of securities that were the bad paper investments being bought up and then abandoned by investors which led to the housing collapse that threw us into this economic downturn in the first place. The federal reserve has done this "bond buying" twice before, and say it helped create 3% job growth. Job creation is their goal, but by doing this the Federal Reserve is basically giving us QE3, and though we may see a temporary kick upward, it worsens what we have to pay the piper down the road - and it is simply a repeat of a failed policy that has done nothing but worsen our financial woes.
The Stock Market responded nicely, for now, but the Left's attempt to print even more money to support an economic recovery that has done nothing during Obama's presidency shows us that they are in a panic. They are doing what they can to manipulate the system to create an artificial up-kick in the economy, and delay financial collapse that is plaguing a number of nations in Europe who have followed similar entitlement and big spending policies like we are seeing by this administration here in the U.S. right now.
Once Wall Street realizes this stimulus is an action born out of panic, the stocks are going to plunge southward.
This is yet another Keynesian plan born from failed concepts, and dangerous spending strategies.
The strategy includes keeping down the interest rate, which hurts those with retirement savings, and in particular retirees who are trying to live off of a fixed income now down to pennies because of the low rate.
The federal reserve claims the low rate will encourage borrowing, but businesses refuse to borrow because of the unstable economy, and not knowing what Obama may have next for them in regulations, taxes, and financial idiocy when it comes to the liberal left's handling of the economy.
Mitt Romney said of the Bond Buying Program announcement: "The Federal Reserve’s announcement of a third round of quantitative easing is further confirmation that President Obama’s policies have not worked. After four years of stagnant growth, falling incomes, rising costs, and persistently high unemployment, the American economy doesn’t need more artificial and ineffective measures. We should be creating wealth, not printing dollars.
The thing is, this has nothing to do with trying to fix the economy, and everything to do with simply hoping for a temporary bump-up that lasts just long enough to get Obama re-elected.
-- Political Pistachio Conservative News and Commentary
Fed Launches New Bond Buying Program - Fox Business
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