Fed to buy up to $300B long-term Treasury bonds (AP)
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Great! I am totally amazed, but puzzled.
What "to buy back treasury bonds" used to mean?
If my understanding is right on traditional science of economics. That shall be interpreted as: To print more paper money (that will cost FED 4-5 cents each paper or note called American green buck, a "fiat money" or "digital money" stored in a computer register without a hard copy of print and cost almost nothing to Fed.)
That's right, in theory, we should have more money supply or credit liquidity.
Then what shall come next to your brand new bill? The most obvious result is the green buck loses its real purchasing power almost in every fold in such ways like "
Then what could be next? How about Inflation? Gas pump price? China trade? Well, I will leave you guys the first two questions for you to answer.
As to China?
China, just downgraded last night by World Bank giving an estimated 6,5% of growth to down play China's official expected 8%, shall have more confidence over the outlook of export to USA. But who knows how the international commodities react to this Fed announcement.
Wal-Mart shall be very "happy" since they have 5,000 Chinese suppliers out of its 6,000 vendors.
Great! Stocks soar immediately March 18, after the FED release around 2:30. That was interpreted as a rescue in terms of bond market! But, what would be perceived in the stock market if FED simply said it would upgear his printing machine to print more money, not to mention Treasury bonds?
Which way Dow would move? Up North? Or down south?
NOTE:
This article had been stored in AR as a "draft" for 2 days. I have had no "incentive" to release it or even speak on other topics related to finish it. After I saw the article "The Real AIG Conspiracy," I just release it ONLY to serve as a TLC warming to my fellow agent friends to be very careful and use your good judgement.
The Fed will borrow all it can, ultimately driving interest rates up and the economy down; and will be forced to print trillions more, creating inflation. My guess for the stock market is that it has yet to discover the bottom.