The Fed's 2:15 decree; Where will it get that $600 billion? What could possibly go wrong?Submitted by Michael Nystrom on Wed, 11/03/2010 - 18:54
Update: Official FOMC Statement Here.
WASHINGTON (MarketWatch) — The Federal Reserve pledged on Wednesday to start a controversial new $600 billion bond-buying spree to rescue the economy from its current doldrums.
The Federal Open Market Committee of the central bank said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, including about $75 billion this month, in a strategy called quantitative easing.
As I said below, don't expect the Fed to buy anything that is not guaranteed by the Federal Government. They are, after all, a bank. They're not going to lose.
Marketwatch: The market remains focused on the Fed, whose policy announcement is due at 2:15 p.m. Eastern time. Observers largely expect some form of quantitative easing as the central bank seeks to boost the U.S. economy.
Bloomberg: The Federal Reserve will probably begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News.
Where will they get the $500B? They'll conjure it up from the ether with black magic Fed spells. Easy like pie - what could possibly go wrong?
The Telegraph: China's commerce ministry fired an irate broadside against Washington on Monday. "The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a 'currency war'. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate," it said.
Something to remember about the Law of Unintended Consequences: It is a law.