Fed to spend $600-billion...

[Marmot]

http://www.theglobeandmail.com/report-o ... le1784296/

The U.S. Federal Reserve says it intends to purchase $600-billion (U.S.) of longer-term Treasury securities by the end of the second quarter of next year, kicking off a bold experiment in monetary policy that has about as many critics as it does supporters.

With the central bank's benchmark lending rate near zero, Fed Chairman Ben Bernanke and the policy-setting Federal Open Market Committee are under pressure to find new ways to breathe life into an economic recovery that is too slow to significantly lower an unemployment rate that is near 10 per cent.

At a two-day meeting that ended Wednesday in Washington, the Fed’s key policy makers opted to try quantitative easing, a strategy that will see the U.S. central bank create dollars to buy government debt. The reason: the recovery is slowing at time when unemployment already is double the Fed’s target and a slide into a corrosive deflationary spiral remains possible.

“Information received since the (FOMC) met in September confirms that the pace of recovery in output and employment continues to slow,” policy makers said in a statement released on the Fed’s website. “Although the committee anticipates a gradual return to higher levels of resource utilization in the context of price stability, progress toward its objectives has been disappointingly slow.”

The FOMC said it will purchase the securities at a pace of about $75-billion per month. Policy makers also pledged to review their approach “in light of incoming information,” indicating they are prepared to increase purchases if the recovery continues to fall short of expectations.

Mr. Bernanke and his colleagues at the Fed are betting a second round of QE will “promote a stronger pace of economic recovery” and add some lift to prices to ensure inflation gets back to levels “consistent with (the Fed’s) mandate” to ensure price stability.

Many economists aren’t so sure QE will work, saying Mr. Bernanke is courting trouble.

The Fed bought some $1.7-trillion ( U.S.) of mortgage-related securities during the worst of the financial crisis, a strategy called quantitative easing, or QE. The idea was to lower the cost of money by increasing the supply of it.

But the Fed’s original QE program, which met with broad support and was successful in generating demand, was a response to an historic collapse in private demand.

This time is different. The United States economy is feeble, but it is growing – at a 2 per cent annual pace in the third quarter, according to the Commerce Department’s preliminary estimate.

By embarking on another round of asset purchases, the Fed is taking a crisis measure and deploying it as a tool to calibrate the economy in more normal times.

The risk is that policy makers have little experience with QE, heightening the possibility of unintended consequences. For many economists, that threat outweighs the likely gains from QE. They argue that there’s little that looser monetary policy can do to stimulate demand because interest rates already are historically low – perhaps too low to make the cost of borrowing materially cheaper.

“They are going on a hope and prayer if they think they are going to push down bond yields,” Andrew Busch, global currency and public policy strategist at BMO Nesbitt Burns in Chicago, said before the Fed announcement.

One price that likely will be affected by the Fed’s decision is that of the U.S. currency. (CAD/USD-I0.99-0.0002-0.02%) The greenback has slumped over the past couple of months as Mr. Bernanke and other Fed officials indicated they were gearing up to create more dollars. The decline has put pressure on other currencies, creating tension with U.S. trading partners who see appreciating exchange-rates as a threat to their exporters.

The Fed also is risking creating asset-price bubbles, both at home and abroad. Critics point out that the easy monetary policy that former Fed chairman Alan Greenspan ran over much of the past decade contributed to the excesses in housing and other markets that resulted in the financial crisis.

Wednesday’s announcement was in line with what many market participants were expecting. Ten of 11 members of the FOMC voted in favour of QE and keeping the benchmark market interest-rate target at zero to 0.25 per cent “for an extended period.” Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, voted against the majority for a record seventh consecutive time.

“Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits,” the FOMC statement said. “Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.”

[elena S.]

а я уже брейнстормила коммент по поводу "роды в политеге"...какой облом!
lol

[Yury]

какой облом!

сейчас политкоректно говорить - какой мармот!

[elena S.]

какой облом!

сейчас политкоректно говорить - какой мармот!

а я олд скул

[Yury]

а я олд скул

вас ис дас - "скул"?

[elena S.]

вас ис дас - "скул"?

это когда в очках для чтения можешь разглядеть собачек играющих в карты, которых никто( никто!!!) рассмотеть не смог

ps
luv u tu

[Stanislav]

а я олд скул

вас ис дас - "скул"?

черепушка это по нашему...

[Yury]

я знал что тебе понравится :)

[Marmot]

[Yury]

черепушка это по нашему...

лена, ты там пометь себе в черных списках, что стас тебя старой черепушкой назвал...

стас, а что тогда по вашему "скал"?

[elena S.]

мармот лошадью пошел, изменил название топика..теперь я выгляжу как тотал лузер. .бэд мармот!

[Marmot]

мармот лошадью пошел, изменил название топика..теперь я выгляжу как тотал лузер. .бэд мармот!

A шоб топик зазря не пропадал

[elena S.]

черепушка это по нашему...

лена, ты там пометь себе в черных списках, что стас тебя старой черепушкой назвал...

он и так уже с потолка падает..плевать.. гравити вил take care

[Yury]

мармот лошадью пошел, изменил название топика..теперь я выгляжу как тотал лузер. :oops: :oops: .бэд мармот! :twisted:

ага, типичный старый скул (вотэвер зэт минз)

[Victoria]

лена, а ты доску переверни. по горизонтали