Associated Press
It took longer than it should have to get to this point, but it looks like the Federal Reserve is finally stepping up with a meaningful economic intervention plan.
The Federal Reserve opened a new chapter Thursday in its efforts to accelerate the economic recovery, saying that it would expand its holdings of mortgage-backed securities, and potentially undertake other new policies, until unemployment drops sufficiently or inflation rises too fast.
The Fed said that it will add $23 billion of mortgage bonds to its portfolio by the end of September and then announce its plans for October as part of a new process that aims to prioritize the Fed's economic objectives.
The Fed also said, in a statement following a meeting of its policy-making committee, that it now expects to hold short-term interest rates near zero until at least mid-2015, extending the forecast it made in January by about half a year.
Remember, under normal circumstances, the Fed can lower interest rates to boost economic activity, but that hasn't been a credible option for a long while -- interest rates have already bottomed out -- making quantitative easing the main vehicle.
As Brad Plumer explained, "Since the Federal Reserve can essentially create dollars out of thin air, it can buy up assets like long-term Treasuries or mortgage-backed securities from commercial banks and other institutions. This pumps money into the economy and reduces long-term interest rates even further. And when long-term interest rates go down, investors have more incentive to spend their money now."
This round of buying isn't as significant as QE1 and QE2, but the Fed is making an "open-ended" commitment, suggesting efforts will simply continue until the economy is in a healthier position.
Matt Yglesias, who's reported on this extensively for months, called today's move "a huge positive step."
Republicans, who apparently now admit they're concerned about President Obama benefiting politically from a growing economy, will not be pleased.
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Would somebody here like to explain to the rest of us, how giving banks more money produces more jobs?
A really good cheesecake recipe:
crust
Filling
Directions:
I'm not a financial authority, but by having the Fed buy up these "Mortgaged Backed Securities" instead of regular banks, the risk of the backer (the Fed) going bankrupt should those Securities fail is eliminated, making those who invested in them reasonably sure of seeing a return.
That makes those investments less risky and the banks more stable. That promotes investment and eases lending, which boosts the Market.
Or maybe I'm 100% wrong. :)
YKCOWREBBAJ
sevot yhtils eht dna ,gillirb sawT' ebaw eht ni elbmig dna eryg diD ,sevogorob eht erew ysmim llA .ebargtuo shtar emom eht dnA
She puzzled over this for some time, but at last a bright thought struck her. 'Why, it's a Looking-glass book, of course! And if I hold it up to a glass, the words will all go the right way again.'
Disgusted, do you have any idea where you are? Your post need to be son some fantasy site not here.
'Twas brillig, and the slithy toves Did gyre and gimble in the wabe; All mimsy were the borogoves, And the mome raths outgrabe.
'Beware the Jabberwock, my son! The jaws that bite, the claws that catch! Beware the Jubjub bird, and shun The frumious Bandersnatch!'
The fact that some folks see things completely backwards is no fantasy.
Through the Looking Glass they are.
He took his vorpal sword in hand: Long time the manxome foe he sought-- So rested he by the Tumtum tree, And stood awhile in thought.
And as in uffish thought he stood, The Jabberwock, with eyes of flame, Came whiffling through the tulgeywood, And burbled as it came!
Recipes and bad song lyrics together!
Cherry Pie lyrics
Songwriters: Turner, E; Cagle, J; Chamberlin, S; Dixon, J; Lane, J;
She's my cherry pie
Cool drink of water such a sweet surprise
Taste so good make a grown man cry
Sweet cherry pie, yeah
Woaw
Well, swingin' on the front porch, swingin' on the lawn
Swingin' where we want 'cause there ain't nobody home
Swingin' to the left and swingin' to the right
I think about baseball, swing all night, yeah
Yeah, yeah
Huh, swingin' in the livin' room, swingin' in the kitchen
Most folks don't 'cause they're too busy bitchin'
Swingin' in there 'cause she wanted me to feed her
So I mixed up the batter and she licked the beater
I scream, you scream we all scream for her
Don't even try 'cause you can't ignore her
She's my cherry pie
Cool drink of water such a sweet surprise
Tastes so good make a grown man cry
Sweet cherry pie, oh yeah
She's my cherry pie
Put a smile on your face ten miles wide
Looks so good bring a tear to your eye
Sweet cherry pie, yeah
Swingin' to the drums, swingin' to guitar
Swingin' to the bass in the back of my car
[ From: http://www.elyrics.net/read/w/warrant-lyrics/cherry-pie-lyrics.html]
Ain't got money, ain't got no gas
But we'll get where we're goin' if we swing real fast
I scream, you scream we all scream for her
Don't even try 'cause you can't ignore her
I'm a trained professional
Swingin' in the bathroom, swingin' on the floor
Swingin' so hard forgot to lock the door
In walk her daddy standin' six foot four
Said, "You ain't gonna swing with my daughter no more"
© DICK DRAGON MUSIC;
Benanke is not giving the banks more money. He is giving the consumer more money. Keeping the interest rate low means many good things. But I am glad that Bernanke doesn't have a case of Koch virus. As you may know, Koch virus comes from the Koch Brothers. What happens is: The Kochs get money from subsidies, taxes they don't have to pay, and profits from outsourced government services. When they touch that money, they give it the Koch virus. The virus has been around a long time. Grover Norquist, the no new taxes guy, has it but he is only a carrier. He gives the virus to others like Republicans in Congress and state legislators. Paul Ryan, the medicare voucher guy, has it but he also is a carrier. He is such a good carrier that they decided to talk Mitt Romney, a full-blown infected guy, into putting Paul on the ticket as Vice President. In 2010, the virus was spread to the Taxed Enough Already (T.E.A.) Party who then infected, with the help of Fox News, etc. over the airways to voters who were told to go to the polls to get an anti-Obama shot and cure the economy. What the voters found out was the Koch virus got worse. Some of the symptoms of the Koch virus are: up becomes down, right becomes wrong, memory becomes fuzzy and unreliable, history becomes fiction, fiction become history. Beware the Koch virus!!! Fortunately, there is an effective anti-dote: TRUTH. But truth has a tough time getting out to the people. The airways are blocked by Fox News, Clear Channel (owned by Bain Capital) and a few others. They own 80% of all kinds of ways that the TRUTH travels on and much of the other 20% is infected. So TRUTH has to find other ways to get the message out. By voting and not electing virus infected candidates on November 6, TRUTH will win. At some point, there will be a vaccine to innoculate against the Koch virus. It is pervasive now and TRUTH is on the march against it. Beware the Koch virus.
Twain, Mark
Mmmmm . . . cheesecake!!
When the truth is found to be lies
And all the joy within you dies
(Chorus)
Don't you want somebody to love
Don't you need somebody to love
Wouldn't you love somebody to love
You better find somebody to love
When the garden's flowers, baby, are all dead
Yes, and your mind, your mind is so full of bread
(Chorus)
Your eyes, I say your eyes may look like his
Yeah but in your head, baby
I'm afraid you don't know where it is
(Chorus)
Tears are running, they're all running down your breast
And your friends, baby, they treat you like a guest
(Chorus)
Entropy - were you reading Charlie Pierce today? :D
For whatever it's worth, QE is one of those things that is good macroeconomically and bad microeconomically.
I know , I know... the argument goes, improving the money supply means companies have more to lend and spend, which leads to more hiring, which leads to more demand, and we have an improving economy.
The trouble is, that argument and "stimulus" is based on an economy with a solid fundamentals and structure. We have neither, so the net result of "QE3"will be the same as QE1 and 2. Increasing stock values, corporate profits, and little, if any, micro-economic stimulus...because the macro-to-micro cycle is broken right now.
"But we have to do something..." No, actually, we don't really need to do anything, we could let the economy restructure naturally and tolerate 8-10% unemployment for a few years. Since that is unacceptable...something needs to be tried. I just doubt that this sort of monetary stimulus will have the result that we want it to have....namely, increasing employment.
Fiscal stimulus is more powerful in a demand slump, but the treasonous saboteurs known as the GOTea are too busy ghoulishly cheering for a shhitty economy and doing everything in their power -- OBSTRUCTION -- to make it come about.
This is simply proof the Fed knew it should be doing something long ago, but wasn't about to because 1) they're mostly Republicans, and 2) they weren't about to listen to the uproar from Republicans about helping Obama. Shame on them for waiting till too close to the election so that it will have little impact. And that's why they waited even though they knew they should have acted sooner.
So why again do we have a Federal Reserve? Just like Greenspan before him Bernanke just waits and does nothing, and when he does DO something it's really only benefiting those that already have MONEY - what is this really going to do to help "MAIN STREET"? As for the GOTP controlled Congress - they've already shown that they are traitors to US (95%) - vote them out in November!
Only $109 Billion would be cut in 2013. Do you think congress would do any less? This is not a fiscal cliff, it is a slight slope but Republicans would dump it all on the social life raft while increasing Defense. It is far better to let the sequestration cuts go forward.
"The spending cuts would go into effect under a process called sequestration if lawmakers cannot reach a deal on preventing them by the end of the year. President Barack Obama is required under law to specify how funding for specific programs would be affected."
If the fed would like to qauntitatively ease my and a whole lot of other home owners' situations, take those mortgage-backeds and write off a chunk of the principal they represent. Put some money in consumers' pockets instead of the banks.
One of the problems with the financial crisis is that when the housing market collapsed because of defaults on sub-prime loans, banks were stuck with the mortgage-backed securities that bundled these loans because nobody could figure out how to price them. Now that the Fed is moving to take these off the banks' hands, that goes one step further toward cleaning up their balance sheets. The hope is that this will put the banks on a surer footing and encourage them to help out the consumer side of the mortgage loan market. We'll see.
What's to stop the banks from off-loading their mbs portfolios and trading it in for treasuries instead of putting the extra cash into consumer loans? Isn't that what they've done with all of the QEs so far? What's different this time?
It would make me feel a lot better if
somea lot of banksters went to jail.Fred - That was definitely true in the past. That is what the Volcker rule, which just kicked in, is supposed to limit. But I don't know if the limits go far enough. As I said, we'll see.
We need to do whatever it takes to end the unemployment crisis, restore confidence in the American economy, and allow millions of Americans looking for jobs to go back to work. The country needs to get back to work. This move is a crucial step towards restoring our economy and aiding so many Americans that are jobless. Anyone that opposes this measure is a blind fool or else rooting for failure. And Mitt Romney is rooting for the failure and devastation of America. Of course Mitt opposes any stimulus measure, because he needs a bad economy and economic misery in order to have any chance at beating Obama. Romney is purposefully weakening the nation with his reckless rhetoric and thoughtless attacks. - pprogressive
really, whatever it takes? How about letting 50 million people starve to death? I mean, you did any "whatever it takes."
Sarcasm aside, I think you take my point...you don't really mean whatever it takes, you mean whatever action is reasonable to take should be taken. Of course, that implies the question of whether a monetary stimulus of the this type is a reasonable action if the effort is to create job growth. Which we could have a serious debate about.
Of course, that wouldn't lead so easily and directly to "republicans are evil", which you managed to do in one sentence.
So sarcasm makes a return:
And you expect people to take you seriously?
Probably a lot of smiling faces at Wall St. and banks today. The Fed has their back. I would like to see our do nothing congress pass a law that credit card interest rates can be no more than 6%.
That would free up some money for the middle class to purchase products and stimulate the economy. Also I'd like to turn those Wall St. smiles upside down.
I really, really, really, REALLY hate your light blue typw!!!!!!!!!!!!
How hard would it be for the next Obama administration to, um, "purchase" some of those mortgages and allow the owners to at least refinance to a lower interest rate?