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Chairman Ben Bernanke and the Federal Reserve have just opened up the coffers and are giving us open ended Quantitative Easing or QE3. Heaven help us.
What some are calling a monetary bazooka, QE 3 will more specifically be the Federal Reserve completely disrupting the natural pattern of economic trends and they will purchase
$40 billion worth of mortgage backed securities a month until the labor market improves. Did you hear the word until in there? That means indefinitely.
That means the Fed is going to print $40 billion more per month and add that to the national debt, as if we don't have a big enough one already, so they can buy mortgages and that is somehow going to improve the job market.
I've spent some time looking around the net this morning at the talking head CNBC type websites and no one is even seriously asking that question,
However, I did find some gems of stupidity in a Rueters report that makes this incredible statement:
By buying mortgage-linked debt, the Fed hopes to press mortgage rates lower, helping the housing market and also encouraging investors in MBS to switch into other assets, lowering their yields as well.
Those lower borrowing costs should spur more lending and foster faster economic growth, officials believe.
Okay, that's brilliant. The Fed hopes to press mortgage rates lower with worthless paper, good idea!
The reason mortgage rates are not lower is because, you know all those bank failures we had this year, 41 to be exact,
yeah, well mortgage rates and interest are what makes a bank earn money, and with all the foreclosures we've seen lately,
banks are trying to earn some money back to cover their huge losses because of those foreclosures. Of course they could fail like 412 banks have since 2008.
While it is the trend these days to want to bash the evil bankers, many banks are just local to your area and are not the big guys on Wall Street the left likes to sic the occupy crowd on.
They are really just small businesses and are failing at an alarming rate because of a record number of defaulting mortgages.
We are in a huge bubble of debt-fueled prosperity right now where things may look good on the outside, people are buying cars, going on vacations, buying computers,
iPads and furniture and most of that buying is funded by debt. People are buying all kinds of stuff they can't afford with someone else's money.
People are driving up their own personal debt to overwhelming amounts and the government is going further into debt encouraging people to do exactly what THEY are doing. Which is, going into debt!
Put on your crash helmets everyone, because economic collapse is coming. The next time you hear a knock at your door, it won't be a Jehovah's Witness or Mormons on bicycles, it will be the economy collapsing.
But hey, at least the stock market is going up.