Fed to buy long-term U.S. government debt

[Anonymous]

The Federal Reserve on Wednesday said it would pump an additional $1 trillion into the U.S. economy to try to pull it out of a deep recession, partly by buying longer-term government debt for the first time in more than 40 years.

In a statement at the end of a regular two-day policy meeting, the central bank's panel said it would buy up to $300 billion in longer-term Treasuries.

http://news.yahoo.com/s/nm/20090318/bs_nm/us_usa_fed_5


1 trillion dollars is a lot of money.

What are the ramifications of this move?

[Anonymous]

Bit of a rise in the prices of paper and ink for all that currency printing?

Actually, plentiful money drives interest rates down, and will weaken the dollar against foreign currencies (good for our exports). So it should short term be good for the housing market, and maybe for autos with more financing available, and possibly for businesses who need to borrow and aren't afraid to do so in today's economic environment. Long term, not such a good thing because we are going back to printing money (increasing the money supply) to buy our way out of trouble.

[Anonymous]

inflation. too many dollars.

[Anonymous]

Last week - 1 Euro = 1.26 USD
Today 1 Euro = 1.38 USD

So our goods going abroad are instantly cheaper, and goods we import (oil anyone?) goes up.

[Anonymous]

Anonymous wrote:inflation. too many dollars.

Having come of age in the 70s I have this well-grounded fear of inflation. But I heard on NPR's Planet Money that inflation is a good thing now because people are afraid of deflation which happened during the Depression (falling prices leading to less production, therefore fewer jobs, etc.).

From day to day, I never know what to expect and it takes a lot of reading and listening to podcasts to sort out how I should feel about it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:inflation. too many dollars.

Having come of age in the 70s I have this well-grounded fear of inflation. But I heard on NPR's Planet Money that inflation is a good thing now because people are afraid of deflation which happened during the Depression (falling prices leading to less production, therefore fewer jobs, etc.).

From day to day, I never know what to expect and it takes a lot of reading and listening to podcasts to sort out how I should feel about it.

Inflation is good and needed right now, but I believe that it will spiral and will not remain in check.

[Anonymous]

US will lost its status as a resever currency. The beginning of the end.