The Fed to buy $1 trillion worth of securities

[Simbo67]

http://www.nytimes.com/2009/03/19/bu...d.html?_r=1&hp

From the NY Times
In a surprise, it (the Fed) dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.

[RetiredProvo]

Does this mean the Brits are on their own with quantitative easing as their silver bullet or is this the beginning of a combinded campaign by them and the U.S. to drag their respective economies out of recession?

[Ecoguy]

This may sound like a stupid question but what is the difference between this and what Mugabe is doing with the Zimbabwe dollar ie simply printing more money???

[Simbo67]

In some respects not much, increasing the quantity reduces the price (the dollar has dropped 3% since the announcement). If we get out of this, it will likely be followed by a big dose of inflation.

[RetiredProvo]

According to George Lee on the 9 O'Clock news earlier, he reakons the Fed's move will send the Dollar south and bring sterling along for the ride.
The question is, did Obama take this decision after seeking counsel from our financial Guru Cowen yesterday??

[KingKane]

I think part of the plan (or so my myriad advisers have told me) is to buy up some of that toxic debt (at say 35c in the $) and by cleansing the banks they can get back to lending some time in the latter half of this year.

[Simbo67]

Yeah, that is part of the plan, it will be interesting to find out what level they pick (too much and they bail out money unnecessarily, too little and the hobble the banks).

[Sierra]

I think part of the plan (or so my myriad advisers have told me) is to buy up some of that toxic debt (at say 35c in the $) and by cleansing the banks they can get back to lending some time in the latter half of this year.

Indeed, however there have been many attempts to get the banks to start lending again in recent months, but to be honest they are just too scared to at the moment.

[Anorakphobia]

No bank has ever taken a gamble like the Fed is now doing.
If this goes wrong and my guess is that it will (partly because it has never worked anywhere), God help us all.
In the meantime, bye bye dollar.

[G unit Paramilitary]

The dollar is actually stronger now against the pound,then it was a year ago.