The Federal Reserve has chosen inflation of the US dollar through the creation of more valueless dollars. To top it off they have promised to buy $40 billion a month of mortgage bonds and $85 billion a month of US treasury securities. From WaPo:
The Federal Reserve under Chairman Ben Bernanke is trying to help the economy by doing something President Barack Obama and Congress can’t and which Mitt Romney opposes: electronically creating money, mostly out of thin air.
The Fed says it will “buy” $40 billion a month in mortgage bonds until stubbornly high unemployment eases substantially. The Fed’s new move is on top of its $85 billion-a-month purchases of Treasury securities under an existing program.
It hopes to hold down long-term interest rates long enough to stimulate more private-sector borrowing and hiring.
Democrats generally welcomed the step, although Obama’s camp won’t comment on Fed actions. Republicans called it further confirmation that Obama’s policies are failing.
“The president’s saying the economy’s making progress, coming back. Bernanke’s saying, ‘No, it’s not. I’ve got to print more money,’” Romney told ABC.”
Today, with all of everyone’s attention on the mobs in the middle east, it seems that few are paying attention to the recent announcement by Fed chairman Bernanke. He is blatantly playing politics by trying to give the economy a boost just before the election. It’s an effort to make the Obama economy look better than it is.
In the process he’s playing with fire. Printing billions more dollars, buying T-bills, and mortgage securities with invented money is a sure way to make the inflation rate become a major problem. But, it won’t happen until after the election.
We haven’t heard anything about the mortgage bonds he’s talking about buying. I’m wondering if they are the sub-prime securities that popped the housing bubble.Share