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Federal Reserve’s Trillion Dollar Debt-Buying Plan Eases Lending and Zaps the Greenback
While the U.S. Federal Reserve’s plan to buy more than $1 trillion in debt has helped unfreeze the credit markets, it has also effectively capped U.S. Treasury yields and undermined the dollar. And that’s caused commodities to soar as currency speculators and safe-haven investors head for higher ground.
At the culmination of the policymaking Federal Open Market Committee’s (FOMC) two-day meeting Wednesday, Fed Chairman Ben S. Bernanke revealed that the central bank would purchase up to $300 billion in longer-term Treasury securities, as well as an additional $750 billion of mortgage-backed securities. The central bank also said it would buy debt issued…
20Mar2009 | Money Morning | 0 comments | ContinuedWhy Fed Policies and Treasury Department Bailouts Will Lead to Inflation Rather Than Deflation
The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) both fell in October. Those declines – combined with sharp downward spirals in worldwide stock and commodity prices – have caused many analysts, and even central bankers, to worry that we are on the brink of deflation.
Such concerns may be warranted in the short-term. But in the long run, deflation won’t be the challenge we face.
Thanks to an overly aggressive central bank, and more than $1.5 trillion in U.S. Treasury Department bailout programs – as well as other factors related to the ongoing global financial crisis – inflation…
3Dec2008 | Money Morning | 0 comments | Continued
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