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The Federal Reserve on Tuesday said it would begin funneling proceeds from its maturing mortgage bonds into longer-term government debt in an effort to support a sputtering economic recovery.

The Fed, which left benchmark overnight interest rates steady in a zero to 0.25 percent range, also renewed its pledge to keep them low for an extended period, as widely expected.

The decision to reinvest mortgage bond proceeds, an effort to keep market-set borrowing costs down, represents a significant policy shift for a central bank that just a few months ago had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

"To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities," the Fed said in a statement. (Read full statement here.)

.../

...doing everything they can. Now they're supporting prices by acting as the whole market for security yields being saved in "safe" treasuries.

Nice try.

We should get a bounce out of this though.

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So this isn't money creation, it's not-contracting-the-money-supply-when-we-have-the-opportunity? Sounds inflationary, but not hyperinflationary.

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So this isn't money creation, it's not-contracting-the-money-supply-when-we-have-the-opportunity? Sounds inflationary, but not hyperinflationary.

QE1 QE2 QE3 QE4 QE5.................get the picture.

Mike

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With the US facing deflation this isn't as risky as if we tried it. Inflation here is already starting to get out of control. More QE here would surely mean a hyperinflationary death spiral.

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No more QE, is this.......................no more options left?

http://www.cnbc.com/id/38642624

he Federal Reserve on Tuesday took fresh steps to lower borrowing costs amid a softening economic recovery, announcing it would use proceeds from its maturing mortgage bonds to buy more government debt.

United States Federal Reserve

Tetra Images | Getty Images

United States Federal Reserve

The decision to reinvest proceeds from the more than $1.3 trillion in mortgage-related debt the Fed holds, an effort to keep market-set borrowing costs down, represents a significant policy shift.

Just a few months ago, the central bank had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

"To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities," the Fed said in a statement.

The move was somewhat surprising.

Although many analysts and investors had expected the Fed to announce it was reinvesting the mortgage proceeds, most had thought it would buy more mortgage debt instead of government bonds.

Some analysts believe the Fed will end up having to go further in coming months and restart its shuttered program of outright asset purchases.

"The Fed is a step closer to reviving its program, but it will likely take somewhat slower growth to push it off the fence," said Sal Guatieri, senior economist at BMO Capital Markets.

The Fed also left benchmark overnight interest rates steady in a zero to 0.25 percent range, and renewed its pledge to keep them low for an extended period.

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QE1 QE2 QE3 QE4 QE5.................get the picture.

Mike

The US (and UK) governments need to choose whether they prefer to be Iceland or Zimbabwe. They have no other choices, and neither ends well.

A teaspoon more QE is not enough to yet convince me they will go the route of Zimbabwe, which is ultimately probably the more destructive.

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So no $ are being created? If so sensible. The sooner the real problems are dealt with, the sooner a proper economic recovery can begin. To much debt, to much government spending, asset bubbles...

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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