Nov. 3, 2010: The Fed announces it will buy $600 billion more in Treasury bonds gradually through the middle of 2011 to try to drive down interest rates on mortgages and other debt.
This has been great, at least temporarily, for the markets. The markets are up, rates are down, what could be bad?
The Fed it callng it ‘QE2' for ‘Quantitative Easing-Round 2'.
The Fed is printing the money already to buy these bonds. Why don't they just print and buy 100 bazillion dollars. They obviously feel that the US economy isn't as going as well as they want everyone else to belive it is or they wouldn't be doing it.
At least interest rates will stay low for a while longer, and with $600 Billion, we'll definitely see more money flowing through the system.
And since the banks have almost $1 Trillion in reserves, 1. The Fed wants them to spend it! And 2. they want consumers to start spending more, and 3. they want companies to gain confidence from numbers 1 and 2 and use the low interest money to do whatever is needed to create jobs!
Whether it will work or not remains to be seen. Most consumers, myself included, are much warier and more cautious than they have ever been about spending and credit. Lessons well learned. The big, and small, companies know this and will probably wait a bit to start expanding, although expand they eventually will.
And this also means the stocks will continue to rise. Our stock markets increasing in value is sorely needed as part of our economic rebound.
As President Bush said, "Go out there and spend your money", and I say "go out there and buy a home and call me for financing!" :)
Andy Brown, Florida's Number One FHA, VA, RD and Jumbo Financing Lender
Fidelity Funding Mortgage,
407-472-3443 888-774-4410 ext 232
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