quote:


Here is the paragraph from the FOMC statement that sums it up:

"....The Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions...should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

Translating from Fed-Speak, the purchase of mortgage-backed securities is Quantitative Easing. Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.

This is a monster, huge, gargantuan change from prior operations. QE1 "cost" $1.7 trillion. QE2 was half a trillion, give or take. The new plan isn't really QE3, because it's never scheduled to end. It is an entirely different, frightening animal.

What makes it scary is contained in the next paragraph:

If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

Employment is weak and is expected to be despite the Fed's best efforts. In response, the Fed is opening the spigots even further and vowing to continue to do so until this failed strategy starts working. There's a certain willful spunkiness to the plan, but in terms of economics it's little short of bizarre.

Bottom Line: The Fed has made up new rules by lifting all restraints on existing policies. Should they desire different stimulus, the Fed will need to invent a whole new policy. It's a bullish move in the sense that pouring more money into the system inflates values. Stocks, gold, oil... basically everything except the dollar "should" go up in value.

quote:

ORIGINAL: subrob1967

quote:


Here is the paragraph from the FOMC statement that sums it up:
"....The Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions...should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
Translating from Fed-Speak, the purchase of mortgage-backed securities is Quantitative Easing. Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.
This is a monster, huge, gargantuan change from prior operations. QE1 "cost" $1.7 trillion. QE2 was half a trillion, give or take. The new plan isn't really QE3, because it's never scheduled to end. It is an entirely different, frightening animal.
What makes it scary is contained in the next paragraph:
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
Employment is weak and is expected to be despite the Fed's best efforts. In response, the Fed is opening the spigots even further and vowing to continue to do so until this failed strategy starts working. There's a certain willful spunkiness to the plan, but in terms of economics it's little short of bizarre.
Bottom Line: The Fed has made up new rules by lifting all restraints on existing policies. Should they desire different stimulus, the Fed will need to invent a whole new policy. It's a bullish move in the sense that pouring more money into the system inflates values. Stocks, gold, oil... basically everything except the dollar "should" go up in value.

Thanks Ben... You're FIRED!
Incredible... simply incredible.

• A Conservative interpretation of the US Constitution
  
• Personal Responsibility
  
• Help for the truly needy
  
• Limited Government
  
• Consumption Tax (non-profit charities and food exempt)
  

quote:

ORIGINAL: DesideriScuri

quote:

ORIGINAL: subrob1967

quote:


Here is the paragraph from the FOMC statement that sums it up:
"....The Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions...should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
Translating from Fed-Speak, the purchase of mortgage-backed securities is Quantitative Easing. Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.
This is a monster, huge, gargantuan change from prior operations. QE1 "cost" $1.7 trillion. QE2 was half a trillion, give or take. The new plan isn't really QE3, because it's never scheduled to end. It is an entirely different, frightening animal.
What makes it scary is contained in the next paragraph:
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
Employment is weak and is expected to be despite the Fed's best efforts. In response, the Fed is opening the spigots even further and vowing to continue to do so until this failed strategy starts working. There's a certain willful spunkiness to the plan, but in terms of economics it's little short of bizarre.
Bottom Line: The Fed has made up new rules by lifting all restraints on existing policies. Should they desire different stimulus, the Fed will need to invent a whole new policy. It's a bullish move in the sense that pouring more money into the system inflates values. Stocks, gold, oil... basically everything except the dollar "should" go up in value.

Thanks Ben... You're FIRED!
Incredible... simply incredible.

Bern-yank-me said that this round of whatever you want to call it will tend towards having a more inflationary effect, but that there are tools they can use to keep that in check. What that means is that The Fed is going to have to do more and more to keep prices down, meaning it's going to cost us more and more to keep prices down. This could have a huge impact on Obama's re-election, in either direction. Though, I don't know that it's automatically giving the election to Romney.

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ORIGINAL: subrob1967

Incredible... simply incredible.

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ORIGINAL: tj444
oh dont be silly.. all that stuffs is waaaaaay beyond the vast majority of voters... 58% think Obama will win..

"Americans' prediction of who will win is significant since they have generally been correct in predicting the winner of past presidential elections."
http://www.gallup.com/poll/156914/americans-predict-obama-win-2012-election.aspx

and imo Obama will win cuz when people get in that voting booth.. fear of the big bad R will cause them to vote for the devil they know, Obama..

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ORIGINAL: subrob1967

Call me crazy but I believe that the majority of Americans won't be happy about the government printing 40 billion a month in yet another effort to "stimulate" the economy.

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ORIGINAL: Yachtie

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ORIGINAL: subrob1967

Call me crazy but I believe that the majority of Americans won't be happy about the government printing 40 billion a month in yet another effort to "stimulate" the economy.

Ok. You are crazy. Americans have put up with it so far. What's another few more miles of billions? Besides, the NEW iPhone5 ... ain't it great?

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ORIGINAL: subrob1967

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ORIGINAL: Yachtie

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ORIGINAL: subrob1967

Call me crazy but I believe that the majority of Americans won't be happy about the government printing 40 billion a month in yet another effort to "stimulate" the economy.

Ok. You are crazy. Americans have put up with it so far. What's another few more miles of billions? Besides, the NEW iPhone5 ... ain't it great?

They have? Can I ask how you thought the Tea Party became so popular, and sent so many members to Congress in 10?

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ORIGINAL: Yachtie
The TP has given up that plank in favor of more social ones. The TP hardly got behind Ron Paul.

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ORIGINAL: Lucylastic

Lets face it Romney couldnt win on his charm, tact, diplomacy, foreign policy knowledge, popularity or truth, let alone his policies and platform, Maybe Bernanke felt sorry for him

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ORIGINAL: subrob1967

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ORIGINAL: Yachtie
The TP has given up that plank in favor of more social ones. The TP hardly got behind Ron Paul.

No one got behind RP because RP is a racist Twat.

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The Obama Administration has already rewritten the rules we use to calculate the inflation rate, hiding the reality, but it still shows up at the grocery checkout.

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Bernanke just hands the election to Romney