Federal Reserve launches QE3

Posted: September 13, 2012 in American Debt Crisis, Economy, Fed Financial Policy, United States
Tags: , , , ,

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This report contains a great 90 second video of QE3 and lots more: http://money.cnn.com/2012/09/13/news/economy/federal-reserve-qe3/index.html?iid=Popular

Captain Rick’s Response: The entire Fed policy of ‘Quantitative Easing’ is wrong, especially this QE3 gigantic purchase of Billions of mortgage debt, of which the liability will be passed on to all responsible mortgage paying Americans. The Fed is acting in desperation because our leadership DC is ineffective. I hope the November election will replace the majority of incompetent legislators that currently represent us. The fix for the problem is to have our legislators fix our National Debt which is heading for the ‘Fiscal Cliff’. Agree/Disagree…Sound off and reply!

Some interesting excerpts I found in the report:

NEW YORK (CNNMoney) — The Federal Reserve announced plans to unleash more stimulus Thursday, in its third attempt at a controversial program to rev up the U.S. economy.

The policy, known as quantitative easing and often abbreviated as QE3, entails buying $40 billion in mortgage-backed securities each month. The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months.

The Fed is wasting no time. The purchases begin Friday and are expected to add up to only $23 billion for the remainder of September.

Meanwhile, the Fed will continue its existing policy known as Operation Twist. Together the two programs will add $85 billion in long-term bonds to the Fed’s balance sheet each month.

In addition, the Fed also indicated that it plans to keep short-term interest rates at “exceptionally low levels” until mid-2015. Previously, the Fed had forecast rates would remain low until late 2014.

Bernanke also admitted that the Fed alone is not strong enough to fix the job market.

“I want to be clear — While I think we can make a meaningful and significant contribution to reducing this problem, we can’t solve it. We don’t have tools that are strong enough to solve the unemployment problem,” he said.

In implementing QE3, the central bank does not use taxpayer money to buy bonds. Rather, it expands the U.S. money supply and electronically credits banks with more funds.

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