Will The Fed Really Stop its QE Adventures?Submitted by Smaulgld.com on Fri, 05/24/2013 - 18:52
The Fed: Talk Taper, Print Paper
Since the beginning of the year the Fed has been talking about cutting back on its quantitative easing (“QE”) program that has been in effect for nearly five years. That talk has been increasing in recent months. QE involves creating money out of thin air in order to purchase US Treasuries and Mortgage Backed Securities (MBS’s) – securities for which there is limited market demand and the Fed is the primary buyer.
The reason for QE is to lower interest rates and stimulate demand. Fed Chairman Ben Bernanke is currently touting his low interest policy as the reason for the recent upswings in the housing and stock markets which are doing well in spite of the generally sluggish economy. Mr. Bernanke has also claimed that the Fed’s low interest rate policy did not contribute to the housing bubble, its subsequent bursting and financial crisis of 2008. The Fed’s policies only help, never hurt.
Next Fed Trick-”tapering” -Making Dollars Created Out of Thin Air, Vanish into Thin Air