The Fed: As Ben Bernanke digs in, we start to wonder about his exit strategy. Has he really found a way to print trillions of dollars in new money without a disaster down the road?
The Federal Reserve this past week continued its ongoing debate with the late Milton Friedman, who famously held inflation always had its roots in money — i.e., too much of it.
It detailed a program of bond-buying, involving both Treasury securities and mortgage-backed securities (MBSs), that will swell its balance sheet and probably continue for at least two more years. The goal, as before, is to hold interest rates at or near zero.
The Fed will stay the course until the jobless rate drops to 6.5% or year-over-year inflation rises to 2.5%.
It will carry out this plan by essentially printing money — lots of it. The Fed has added some $2 trillion to its balance sheet since the end of 2008 (putting it at about $2.9 trillion, see chart) as it creates new bank reserves to buy bonds.
Read more at Investors Business Daily.
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Dear Fed, Please ease my Quantitative Pain. Digitize into my account a couple of Billion Obama Bucks. And be sure to make enough pile of worthless paper at the bottom of the cliff so that when we hit the bottom there will be plenty large of a pile to cushion my hitting the bottom of it. But 2 or 3 billion for my account will ease the pain at the bottom. Thankyou, Sincerely, Me.
Bernanke already stated in an interview that he has no remedy available for when we go off the “fiscal cliff”. Nice.