What’s a few more billion dollars a month in today’s money? On Thursday, the Federal Reserve announced that they were going to purchase $40B more mortgage backed securities every month, a total of $85B, with money they more or less print themselves. It’s the third round of Quantitative Easing, or QE3, but this time they left the dollar amount open ended. We can guess that by the time they stop the total amount printed will be around $2T. That’s more like the insane numbers we’ve gotten used to the last four years.
They are doing this because unemployment remains stubbornly high in a weak economy. Why they picked mortgages and what affect it will really have is another long story, but the bottom line is that election year or not the Fed is on the case and doing whatever it can. But is it too much? And what comes after all this money is printed? There are a lot of questions. Let’s work our way through them.
Barataria - The work of Erik Hare 