Fed to Buy U.S. Debt, Saying Recovery Has Slowed

The New York Times ^ | August 10, 2010 | The New York Times

[John W]

Acknowledging that the recovery has slowed, the Federal Reserve announced Tuesday that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities, The New York Times’s Sewell Chan reports from Washington.

By buying government debt, the Fed is taking an unmistakable step to maintain the large amount of money that it pumped into the economy, starting in 2007, to prop up the financial and housing markets.

[Toddsterpatriot]

There IS a way out

ROFLMAO!!!

We need to give the governor in each state his own bank to use for corrupt purposes. Excellent idea. What could go wrong?

You should deposit your money in the new State Bank of Michigan.

[edcoil]

I might agree with you if I saw any financial restraint by the last administration as well.

The government has exploded to be un-sustainable and printing money while a problem does not hold a candle to the pensions and benefits coming.

There was a book called The Graying of America it shows over 70 trillion in legal obligations to be paid.

Unsustainable.

[EBH]

Oh somewhere way, way back I blogged about this very scenario. History is repeating itself.

We're so far in debt that the only way out, is to crash the debt bubble itself.

Weimar Republic. How does this look now?

Fraudulent ‘Credit Crisis’ Paves Way for Economic Disaster FamilySecurityMatters ^ | 12/16/08 | Cliff Kincaid

Charley Reese Sees a "Weimar Republic" in Our Future

[wendy1946]

The power to create money has to reside somewhere other than banks. The state bank idea is working tremendously well in North Dakota, my own ideal solution would be to have churches creating money and spending it into circulation.

BTW, have you ever figured out how fractional reserve banking works yet??

[fhayek]

The financial wisdom at FreeRepublic surpasses anything seen at the Fed, or at Treasury....unless, unless, unless... they are doing this with the full knowledge of the consequences. (George Soros, anyone?)

[edcoil]

http://en.wikipedia.org/wiki/Fractional-reserve_banking

[driftdiver]

If you want to break a system you have to break it first.

[mainsail that]

“use proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities”

...proceeds from its huge junk mortgage-bond portfolio to buy long-term junk Treasury securities.

[RipSawyer]

http://www.youtube.com/watch?v=xGxDS10VAbg

http://www.youtube.com/watch?v=pVNcqb2a3KA

[freedomfiter2]

Only the Fed can “create money”, not the gvt.

What did the government do before the FED?

[Tzimisce]

...so now we’re selling ourselves bonds?

[RipSawyer]

It doesn’t work nearly as well for the purpose though.

[dalebert]

thanks for explaining that to me...

[dalebert]

agree

[driftdiver]

OOPS If you want to break change a system you have to break it first.

[SunkenCiv]

the Federal Reserve announced Tuesday that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities... taking an unmistakable step to maintain the large amount of money that it pumped into the economy, starting in 2007, to prop up the financial and housing markets.

Thanks John W.

[DrC]

“Should folks take retirement money out of investments and stuff the mattress with it or what?”

This guy thinks we’ll see Dow 8,000 by December:
http://www.triwealth.com/investor-radio.php

I believe him. I’m perfectly willing to stay out of the stock market until things settle down. Bonds or money market fund seem like a reasonable alternative to me (although I also recently put some IRA funds into gold index funds (unfortunately, this option is not available for my 401(k)).

[wendy1946]

I know how fractional reserve banking works. The guy with the problem is toddsterpatriot.

[Toddsterpatriot]

Poor Wendy, still pushing for those state owned banks.

If you ever have any questions about fractional reserve banking, I'll be glad to try to clear up your confusion.

[Mase]

Is this a reprise of the “all money is debt” argument?