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Fed Undertakes QE3 With $40 Billion MBS Purchases Per Month
San Francisco Chronicle ^ | 09/13/2012 | Joshua Zumbrun

Posted on 09/13/2012 3:12:59 PM PDT by SeekAndFind

The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment.

“We’re looking for ongoing, sustained improvement in the labor market,” Chairman Ben S. Bernanke said in his press conference today in Washington following the conclusion of a two-day meeting of the Federal Open Market Committee. “There’s not a specific number we have in mind. What we’ve seen in the last six months isn’t it.”

Stocks jumped, sending benchmark indexes to the highest levels since 2007, as the Fed said it will continue buying assets, undertake additional purchases and employ other policy tools as appropriate “if the outlook for the labor market does not improve substantially.”

Bernanke is enlarging his supply of unconventional tools to attack unemployment stuck above 8 percent since February 2009, a situation he called a “grave concern.” The decision immediately provoked a renewed backlash from Republicans, including Senator Bob Corker of Tennessee, who said Bernanke’s policies damage the Fed’s credibility while doing little to spur the economy.

The FOMC also said it would probably hold the federal funds rate near zero “at least through mid-2015.” Since January, the Fed had said the rate was likely to stay low at least through late 2014. The Fed said “a highly accomodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

(Excerpt) Read more at sfgate.com ...


TOPICS: Business/Economy; Front Page News; Government
KEYWORDS: bernanke; dollardevaluation; fed; federalreserve; gulfoftonkin2012; qe3; seewagthedog; wagthedog2012

1 posted on 09/13/2012 3:13:08 PM PDT by SeekAndFind
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To: SeekAndFind

Insanity!!!!


2 posted on 09/13/2012 3:14:26 PM PDT by isthisnickcool (Sharia? No thanks!)
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To: isthisnickcool

Only if they’re expecting different results.


3 posted on 09/13/2012 3:20:46 PM PDT by gundog (Help us, Nairobi-Wan Kenobi...you're our only hope.)
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To: SeekAndFind

Money-Center banks and direct dealers will do great

Prepare to have your wages and savings further cut by inflation and zero interest-rates


4 posted on 09/13/2012 3:20:55 PM PDT by PGR88
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To: isthisnickcool

Yup! Insanity!

http://confoundedinterest.wordpress.com/2012/09/13/fed-pulls-the-trigger-with-new-bond-buying-program-40-billion-in-mortgage-backed-securities-per-month/


5 posted on 09/13/2012 3:21:04 PM PDT by whitedog57
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To: SeekAndFind

Beyond the gobbledegook, doesn’t this simply mean the Fed is going to print money as fast as possible?

Hyperinflation, here we come.


6 posted on 09/13/2012 3:22:16 PM PDT by Ole Okie
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To: SeekAndFind

Roosevelt’s “Pump-Priming” run amok.


7 posted on 09/13/2012 3:23:40 PM PDT by Ole Okie
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To: SeekAndFind
Is there any valid reason at all why Bernanke should't be hauled off in leg irons the minute Romney is sworn in as president?
8 posted on 09/13/2012 3:24:06 PM PDT by Iron Munro ("In any compromise between good and evil, it is only evil that can profit." - Ayn Rand)
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To: SeekAndFind

Sorry, I do not see how buying mortgage bonds will improve the employment rate in any way


9 posted on 09/13/2012 3:25:31 PM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: SeekAndFind

Its over


10 posted on 09/13/2012 3:27:54 PM PDT by dalebert
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To: bill1952

It won’t. This is nothing but giving Banksters guarantee that you the taxpayer will buy all the debt they create. Isn’t that wonderful.


11 posted on 09/13/2012 3:29:52 PM PDT by Orange1998
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To: SeekAndFind

Train wreck.


12 posted on 09/13/2012 3:31:00 PM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: SeekAndFind

If FedGov™ is just printing money why do I have to pay Federal Taxes? Just print what you want and leave me alone!


13 posted on 09/13/2012 3:33:30 PM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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To: SeekAndFind

I don’t get how these guys can keep making these decisions without the approval of US citizens???

(sorry for the dumb question)


14 posted on 09/13/2012 3:34:02 PM PDT by roses of sharon ("Truly I tell you, today you will be with me in paradise." Luke 23:43)
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To: SeekAndFind
I know that the Federal Reserve is now the #1 holder of US treasury debt, but can someone please explain to me how it is that these "QE" events are supposed to stimulate the economy? I suppose that if the Fed is buying treasuries, then they're injecting $$$ directly into the government coffers, which gives the government more money to spend... While at the same time, bringing down the actual value of our dollars.

But how does that stimulate the private sector, or is it just the government spending that's supposed to spark increased private sector commerce?

I don't get it.

Mark

15 posted on 09/13/2012 3:36:49 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: Ole Okie
Beyond the gobbledegook, doesn’t this simply mean the Fed is going to print money as fast as possible?

Hyperinflation, here we come.

Yes, but it does not automatically mean hyperinflation. That's the theory, that we'll have hyperinflation - but we've gone through 2 rounds of QE printing so far and no hyperinflation yet.

This is basically permanent QE and my guess is it was designed to goose the markets even more and guarantee Obama's re-election. Unfortunately the sugar high will likely boost the markets to record highs and it will help Hussein. Soon after the election though people will figure out that Bernanke has nothing left and the markets will crash back to earth.

16 posted on 09/13/2012 3:47:09 PM PDT by Longbow1969
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To: Orange1998
This is nothing but giving Banksters guarantee that you the taxpayer will buy all the debt they create.

Any chance it's also about convincing them to keep writing mortgages after they're done forcing the credit rating agencies to apply race-based "adjustments" to credit ratings?

17 posted on 09/13/2012 3:47:47 PM PDT by tacticalogic ("Oh, bother!" said Pooh, as he chambered his last round.)
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To: SeekAndFind
OK boys... crank-um up!!!


18 posted on 09/13/2012 4:09:33 PM PDT by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: bill1952
It's not supposed to. It's aimed at propping up the face value of mortgage securities comprised of mortgages on homes that aren't worth much anymore.

The whole purpose of this move is to bail out the institutional investors who thought they were buying AAA-rated mortgage-backed securities but learned the hard way that they were wrong.

19 posted on 09/13/2012 4:12:53 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: SeekAndFind

I need to take a dump - anyone got a $20?


20 posted on 09/13/2012 4:14:03 PM PDT by mykroar (October race/religious riots bring November martial law. Voting postponed for your safety.)
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To: SeekAndFind

As the Media has its focus offshore.

Where was DWS when the flick was posted on YouTube?


21 posted on 09/13/2012 4:17:03 PM PDT by NoLibZone (Republican pizza man who only votes for democrats - what's his Freeper name?)
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To: MarkL
I don't know either, but it sounds like the Fed's idea of a twisted "trickle down" method, whereby they feed the banks billions(by way of counterfeit currency) and they(supposedly) pass it down to the consumers. Only problem is, the banks made a lot of bad bets in the past(mortgages, fraudulent security instruments)and use that money to pay those off(with profit of course) before the consumer sees any benefit.

I just got a letter from one of my credit card companies...they were "happy" to announce they have reduced the interest rate to 19.99%...obviously I don't keep any balance with them. Meanwhile my local bank is paying .05% on savings.

They don't call them banksters for noth'n...

22 posted on 09/13/2012 4:30:48 PM PDT by RckyRaCoCo (I prefer liberty with danger to peace with slavery, IXNAY THE TSA!)
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To: SeekAndFind

QE3 will be month to month — September, October, and then terminated in November when Obama starts packing up the White House mementos.


23 posted on 09/13/2012 4:31:55 PM PDT by Uncle Chip
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To: MarkL

For some reason, economists believe that the main problem with lending is lack of funds and not the deteriorating state of both public and private balance sheets all around the world. They believe in their own omnipotence and the absolute correctness of their outdated economic theories which are daily contradicted by this stupid thing called “reality”.


24 posted on 09/13/2012 4:33:22 PM PDT by garbanzo (It's the end of the world as we know it and I feel fine)
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To: garbanzo
For some reason, they also believe that money will go back into the American economy. Obviously, they have never gone anywhere with cars, to see how half of them are foreign and how much of the money we borrow these days goes out of the country.

Just like the stimulus checks of 2007 and all of the other cash infusions, this will bounce around retail for a while before going to the countries that build the cars and other stuff we buy.

25 posted on 09/13/2012 4:50:05 PM PDT by TwelveOfTwenty (Ho, ho, hey, hey, I'm BUYcotting Chick-Fil-A)
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To: TwelveOfTwenty

RE: Obviously, they have never gone anywhere with cars, to see how half of them are foreign

Yes, but don’t they make the Toyota’s, Hyundai’s and Honda’s and yes, even the Volkswagen’s here in the good old US of A?


26 posted on 09/13/2012 5:34:02 PM PDT by SeekAndFind (bOTRT)
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To: Iron Munro

Yep, now Democrats can play ‘flip these bundle mortgages’ with their new Hedge Funds. Buy low, sell high(to Fed)...


27 posted on 09/13/2012 5:54:30 PM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: Ole Okie

Why Print? Go green, Electronic Funds Transfers go farther...


28 posted on 09/13/2012 5:58:24 PM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: SeekAndFind

The Fed is also doing more short-for-long-term swaps and said that it will buy other things (so-called assets), if employment doesn’t increase enough. That’s what’s happening, regardless of what we’d like. True that the debt pile will go higher with uglier consequences, but it’ll buy you more time. Use it wisely.


29 posted on 09/13/2012 6:02:23 PM PDT by familyop (cbt. engr. (cbt), NG, '89-' 96)
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To: Longbow1969

I’ll be surprised if any boost last a week. All businesses are experiencing a state of extreme distress brought on by Democrats.

When it used to be one or two sectors of the economy could be out of favor, now, any day, any number of businesses may fail.


30 posted on 09/13/2012 6:08:16 PM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: SeekAndFind
Just what we need: another "stimulus."

Never mind the hyperinflation it is very likely to create...

31 posted on 09/13/2012 6:47:27 PM PDT by AmericanExceptionalist (Democrats believe in discussing the full spectrum of ideas, all the way from far left to center-left)
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To: MarkL

Well two fold.. lower interest rates for the government allow it it to continue to borrow money at really low interest rates and allow it to continue to spend money in massive deficits with very little consquence.

then with low interest rates you have set the bar low.. so in order to attract investment everyone else must lower the bar, companies and and consumers who can borrow at low interest rates may(and may is the key word) be inclined to borrow money that wouldn’t normally borrow and spend it on things. It is this spending that should spur the economy and produce additional econonic activity that would normally occur. Ideally this generates a cascade effect that pushes the economy forward.

So here’s the problem. Most people have a fear of negative economic development on top of higher future tax rates. why invest money or spend it if you in the future you know that your investment will get you little to nowhere and why spend money if you fear that your investments will be worth less in the future and thus cut into your income. If you are less likely to do these things than borrowing does not matter because you aren’t even willing to spend your own money.


32 posted on 09/13/2012 8:16:57 PM PDT by Almondjoy
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To: SeekAndFind

More “funny money” going to the banks is all this is. “kicking the can down the road”.....


33 posted on 09/13/2012 8:56:56 PM PDT by GrouchoTex (...and ye shall know the Truth and the Truth shall set you free....)
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To: SeekAndFind

More “funny money” going to the banks is all this is. “kicking the can down the road”.....


34 posted on 09/13/2012 8:57:06 PM PDT by GrouchoTex (...and ye shall know the Truth and the Truth shall set you free....)
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To: isthisnickcool

I believe it was Einstein who said the definition of insanity was doing the same thing over and over while expecting a different result.

Hopefully I got that right, but regardless, you are correct. This is insane.


35 posted on 09/13/2012 9:05:50 PM PDT by volunbeer (Don't worry America, our kids will pay for it!)
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To: RckyRaCoCo
I don't know either, but it sounds like the Fed's idea of a twisted "trickle down" method,

The amount of wealth that is generated in the economy is largely a function of how much is in the hands of the people who can most effectively convert marginal capital into additional real marginal wealth. Reagan's so-called "trickle-down" economics served to maximize that quantity. The Fed's policies by contrast seek to direct wealth toward those who have shown that they cannot use it wisely or efficiently.

36 posted on 09/13/2012 11:07:19 PM PDT by supercat (Renounce Covetousness.)
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To: SeekAndFind

Last I checked, there was plenty of money already in circulation, it’s just that no one was actually spending it. Banks have huge reserves of cash, but aren’t lending because the risk is too high. Businesses have stacks of capital, but aren’t spending because they have no confidence that their outlay will provide any benefit. No one needs more money, except the individual, who is left out in the cold as a result, but who needs the cash most of all.


37 posted on 09/13/2012 11:28:59 PM PDT by Little Pig (Vi Veri Veniversum Vivus Vici.)
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To: MarkL
can someone please explain to me how it is that these "QE" events are supposed to stimulate the economy?

The real goal is NOT to stimulate the economy. The real goal is to delay the collapse so that it occurs on somebody else's watch.

38 posted on 09/14/2012 3:52:17 AM PDT by matt1234 (Bring back the HUAC.)
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To: SeekAndFind
Yes, but don’t they make the Toyota’s, Hyundai’s and Honda’s and yes, even the Volkswagen’s here in the good old US of A?

They are assembled in the US, with parts shipped from overseas. I don't know what the average percentage of the parts in transplants are American made, but I understand the percentage is improving. That is if you don't include Mazda, which has moved all of their manufacturing back to Japan.

Of course, the profits still go overseas.

39 posted on 09/14/2012 5:15:56 PM PDT by TwelveOfTwenty (Ho, ho, hey, hey, I'm BUYcotting Chick-Fil-A)
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