Government printing mass amounts of money...

[debbierlus]

The Federal Reserve announced plans Wednesday to buy up to 300 billion dollars in long-term US Treasury bonds over the next six months "to help improve conditions in private credit markets."

Fed to buy up to 300 bln dlrs in Treasury bonds

The central bank also said it was boosting its purchases of mortgage securities by 750 billion dollars, bringing its total to 1.25 trillion dollars this year as part of a wide-ranging effort to revive the sagging US economy.

The announcement was made at the end of a two-day meeting by the Federal Open Market Committee, which kept its base lending rate in a range of zero to 0.25 percent.

"In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the FOMC statement said.

The Fed, which had been expected to keep its federal funds rate unchanged, said it "anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

The US central bank will effectively be printing massive amounts of money for these purchases to help foster recovery in the recession-mired economy, which shrank at a 6.2 percent pace in the last quarter of 2008.




http://rawstory.com/news/afp/Fed_to_buy_up_to_300_bln_dlrs_in_Tr_03182009.html

[cobalt1999]

1. Yet the dollar continues to rise in value

Compared to most other currencies.

[notesdev]

14. Not anymore

Dropped heavily across the board the moment this was announced.

[cobalt1999]

16. Drop from the previous high, however compared to 1 year ago

The dollar vs. the euro was 0.634 one year ago today vs. today's rate of 0.765.

That's a pretty good rise in % value in one year even if a couple of days ago the dollar was at 0.79 Euros.

Hardly a collapse.

[notesdev]

21. You just wait

This sort of thing doesn't happen without consequences.

The dollar may look good against the Euro, but that's only because the Euro has deeper problems.

Compared to, say, the Yen, or gold, the dollar doesn't look so hot.

[greenkal]

2. Good!

Decreasing the value of the dollar really hurts the gluttons that have hoarded money.

[JDPriestly]

15. You mean the people who saved instead of consuming, consuming, consuming?

Or the people who avoided getting into debt because they couldn't see how they could repay the debt?

There is no way to be fair to everyone. Many of us stood by while others borrowed themselves into bankruptcy. We thought we were doing the right thing.

I don't have a large amount of savings, but I also don't much debt. I'm kind of caught, tails I lose, heads I lose in the current situation regardless of how the government tries to bail out those who gambled, borrowed and stole.

It is rather strange because we are all hearing that the best monetary/economic policy is to encourage more borrowing, more spending -- of money that doesn't really exist.

How do people think they are going to earn back the money they are being encouraged to borrow and spend?

We need economic policy that builds our manufacturing sector, monetary policy that makes our wages competitive with those paid in other nations and trade policy that permits us to expert non-military goods to countries that import to us -- with parity.

[rockymountaindem]

19. Changes in the exchange rate are different from inflation/deflation n/t

[roamer65]

3. Worldwide "quantitative easing" will end up in competitive currency devaluations.

The fiat currency system won't survive it.

[Mike 03]

7. Interesting observation, and one of the more intelligent posts here lately.

Definitely worth thinking about.

Thanks.

[Mike 03]

9. Your post deserves it own thread. I'd love to see what others think of it.

Very observant.

[originalpckelly]

10. Marc Faber agrees with you...

I just saw him on Bloomberg a night or two ago, and he said the same thing. It will be a race to the bottom and that one should invest in gold.

[Irish Girl]

18. Historically speaking, fiat currencies have never survived.

The unraveling of a 60+ year fiat bubble is not something I look forward to experiencing.

:scared:

[Orrex]

4. Printed money is a small fraction of actual currency in circulation

[originalpckelly]

5. This could be THE thing to do, or not to do.

1. Printing money in a deflationary spiral, which this is essentially doing, means that the value of the money will decrease, rather than increase. This will prevent people from hoarding money, preventing a depression.

2. On the other hand, the valuations of various goods/services may very well be too high, and this could be a form of continue incorrect valuations.

[Kip Humphrey]

6. The Fed is usually dead silent about printing money. Are they sparking fears of inflation to spur

purchasing in the face of their own deflationary worries? Get folks to buy now cause the price is going up (inflation). If this works, it should help stem deflation.

[WhaTHellsgoingonhere]

12. it's a good policy for a global credit crunch...

...global markets will absorb the influx of dollars. When markets were first deregulated and globalized, the old paradigm went out the window. Fears of inflation due to a significant increase in the money supply were unfounded in the late 1980s.

[MichiganVote]

8. Inflation to come.....

[Liberal_in_LA]

11. yup.

[originalpckelly]

13. We're in a deflationary spiral.

That's what the prices of houses falling means. Gas prices falling are a part of that too.

[NNN0LHI]

17. I have only been getting the new dollar coins lately

Guess this doesn't affect me?

Don

[Gin]

20. invest in wheelbarrows...