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Moving to bolster the recovery, the Federal Reserve on Thursday agreed to buy $40 billion a month in mortgage-backed securities to cut borrowing costs for home buyers and other borrowers, and pledged to keep short-term rates near zero until at least mid-2015.
Markets reacted with wild enthusiasm. After a brief pause to digest the news, stocks soared 0.8% within minutes.
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Economists say it represents a more powerful commitment to pump money into the economy until job growth picks upsignificantly.
Lower long-term rates cut borrowing costs for consumers and businesses, theoretically stimulating the purchase of homes, cars and factory equipment.
It won't. It is only designed to keep people from rioting in the streets by the appearance of the economy hanging on via the stock market. The FED is using monetary policy to prop up Obama prior to the election. Our economy is a house of cards about to fall.
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Originally Posted by chucksnee
Where are we getting the money?
Printing presses and slight of hand with the US Treasury purchasing US debt. Think of it as a magic show where money is created from thin air and the audience is charged for the money they watched being created when the lights come on in this economic theater.
Is that what they are doing here? just buying with newly printed money, driving up the amount of money in circulation?
doesnt that lead to rampant inflation?
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