Federal Reserve to Buy $300 Billion of Longer-Term U.S. Treasuries to monetize the debt

March 19, 2009 by · Leave a Comment
Filed under: Policy News 

Wow, this rocked the markets, value of the dollar and gold bullion.  This is a sign of bad things to come, we now have our central bank buying our debt to monetize it because our bailout policies have shaken the confidence of the foreign investors that would normally buy our debt.   Unless we see a turn around soon, I think the dollar is now in its final decline.  I am very worried about this development.  Be Safe.


The Federal Reserve opened a new front in its battle to bring down borrowing costs across the economy, pledging to buy as much as $300 billion of Treasuries and stepping up purchases of mortgage bonds.

The announcement following the Federal Open Market Committee meeting today in Washington spurred the biggest rally in longer-dated Treasuries in decades. Officials unanimously voted to expand the Fed’s balance sheet up to $1.15 trillion, and said they may broaden a program aimed at boosting consumer loans to include other assets, today’s statement showed.

With today’s move, the Fed has committed to buy or loan against everything from corporate debt, mortgages and consumer loans to government debt, after cutting its benchmark interest rate to zero failed to end the credit crunch. The unprecedented campaign comes after a worsening recession sent the unemployment rate up to a quarter-century high of 8.1 percent.

“The FOMC may believe the economy is nowhere near a bottom,” William Poole, former president of the St. Louis Fed, said in an interview today with Bloomberg News. “The Fed is engaging in a massive quantitative easing.”

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