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FED to Monetize Another $1.75 Trillion in 2009

FED to Monetize Another $1.75 Trillion in 2009
.... debasing the dollar to prop up the housing boom that the FED created.
by Jake Towne, the Champion of the Constitution
Monday, June 29, 2009

"A government that robs Peter to pay Paul can always depend on the support of Paul."

- George Bernard Shaw (photo)

In the June 24, 2009, the Federal Open Market Committee (FOMC) led by FED Chairman Ben Bernanke announced that the FED will monetize another $1.75 Trillion in 2009. The announcement reads "the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn."

This is a last-ditch attempt to continue to prop the housing market from a further collapse due to option, Alt-A, ARM mortgages. As with most of the current interventions, instead of "softening the blow" this action will merely drag out this depression, and likely will make the end resolution that much more catastrophic. Monetization of debt increase the money supply of dollars, which inevitably causes debasement of the dollar by inflation.

Perhaps the real shame in the FED's actions is they merely continue to spur malinvestments and prolong the false economy we now live in. Retired Soviet apparatchiks in their rocking chairs are probably watching their old foes, and reminiscing,"Da, Igor, wasn't that the way we used to do it?"

The FOMC also reported that it "expects that inflation will remain subdued for some time." However, they themselves must realize that the true inflation rate is close to 6%, right? In the mid-1970s, Nixon flipped out and ordered price and wage controls while the inflation rate was a mere 4%.