Fed set to print $600 billion new dollars

[KySongDog]

This should erase all doubt that hyper inflation is just around the corner.   When the Fed prints money, the money in your pocket goes down in value.   


http://www.foxbusiness.com/markets/2010/11/03/fed-leaves-rates-unchanged-buy-b-treasuries/?test=latestnews

Fed Will Buy Another $600B in Treasurys
By Tom Granahan   | FOXBusiness
Published November 03, 2010

f you didn’t know what “quantitative easing” was when you woke up Wednesday, you probably will soon.

Federal Reserve bankers came out of their two-day Federal Open Market Committee meeting this afternoon with some blockbuster, if not wholly unexpected, news: the Fed will purchase about $600 billion more in long-term Treasurys by the end of the second quarter of 2011 in an effort to further prop up the U.S. economy. The Fed will also continue its existing policy of reinvesting principal payments from its current securities holdings.

Of course, this will be the second go-round for quantitative easing â€" a fancy way of saying the Fed is going to print more money â€" and questions abound. Namely, is it needed and will it work?

“Eventually, the labor market will improve, and Bernanke and his chums will take credit for what would have happened anyway without any assistance from the Fed,” said Ed Yardeni, the president of Yardeni Research. “The problem is that they will have to drain lots of reserves from the banking system once this happens by selling their Treasuries. The resulting backup in bond yields could then depress the economy and the labor markets. QE-2.0 is simply a very bad idea.”

In its assessment of the economy, the central bankers said household spending is getting somewhat better but is still being reined in by high unemployment, soft income growth, lower housing wealth and tight credit. Business spending is on the rise, but not at the pace that it was earlier in the year. Commercial real estate is still weak, too.

The Fed left the target on short-term interest rates within the already established range of 0-0.25%.

Stocks gyrated violently as the announcement was released, but the major stock market indexes were generally trading where they were before the announcement about 15 minutes afterwards.

The Dow Jones Industrial Average was recently off 50 points at 11138.

[pitw]

  Geez you guys are lucky to have a government that can do that .

[FinsnFur]

I couldnt agree more that this is a poor way to go about things and how it will devalue the current dollar.......but I seriously have to wonder why we wouldnt need more money in circulation due to the fact that there are more people in circulation.

As in...eventually not enough to go around.

[KySongDog]

I couldnt agree more that this is a poor way to go about things and how it will devalue the current dollar.......but I seriously have to wonder why we wouldnt need more money in circulation due to the fact that there are more people in circulation.

As in...eventually not enough to go around.

More people really has nothing to do with it.   Jobs put money in to peoples pockets not the printing presses run by the Federal Reserve.   

What the Fed is doing is saying, "Hey, we got to buy back the IOU's we put out to borrow money (that Obama spent).  So let's crank up the printing press and "make" new money.  Then use it to pay off the debt."  The US money supply is increased with this "new" money and the dollars already in circulation become less valuable because there is more of it.   Inflation.

In Germany, at the end of the war, Germany's debt was worthless and so was its currency.  Germany ran printing presses night and day to put out "money".  People were taking wheel barrows full of Marks and using them for heat in their fireplaces.  Scary stuff. 

In other words, high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.  Which is exactly what our Federal Reserve is doing. 

[FinsnFur]

In Germany, at the end of the war, Germany's debt was worthless and so was its currency.  Germany ran printing presses night and day to put out "money".  People were taking wheel barrows full of Marks and using them for heat in their fireplaces.  Scary stuff. 

I called the other day and had them bring fuel oil out here to me.....I felt like I was doing the same thing and actually wondered if it'd be cheaper.