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Feds embrace Zimbabwe politics! News Team

Stock market rises, but US currency falling as Feds print money for mega-bank bailout #2.

The Feds plan to print another $1 Trillion in magic money to bail out banks and long term treasury securities. The money already printed has not unfrozen credit, however the steady rise of the US dollar against world currencies has been reversed.

From New York Times…

As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.

The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.

All of the Fed’s measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. Since last September, the central bank has roughly doubled the size of its balance sheet from $900 billion to nearly $2 trillion — even before Wednesday’s action — mainly because of its efforts to rescue credit markets.

Since last September, new lending programs — including money for bailouts of individual companies like Citigroup, American International Group and Bank of America — have caused the Fed to print new money at the fastest pace in history. But much of that money has remained dormant, because the economic downturn has made banks reluctant to lend and businesses and consumers either reluctant or unable to borrow.