Friday, September 14, 2012 – 08:00 a.m.
It was only a matter of time.
Faced with a stalling economy the U.S. Federal Reserve, led by Chairman Ben Benanke, has started the end game in trying to stave off another economic decline.
Yes, the last bullet in the gun has just been fired.
This time it’s QE3 (QE meaning quantitative easing.)
The Fed will now purchase mortgage-backed and other securities it deems appropriate, in order to artificially suppress interest rates, thus helping borrowers and the economy.
Securities will be bought at a rate of $40 billion per month. That’s right $40 billion.
Unlike past plans, the new plan, rather than specifying an end date, will be limitless.
It should also be noted the Fed has decided to also maintain it’s benchmark federal funds rate, the cost banks must pay to borrow directly from the Fed, at the current 0.00 – 0.25% until mid-2015.
Where does the Fed get the money to buy all these bonds?
They ‘print” it out of thin air. No borrowing from foreign governments. No borrowing from the U.S. Treasury. No gold to back it.
Just push some buttons on a computer screen and the money is there.
This time the Fed will push its balance sheet of printed money to $3 trillion dollars.
And the government doesn’t believe people are paying attention.