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Fed to Keep Low Rates

Friday December 14, 2012 11:26 AM - 3 Comments

bernankeBen Bernanke confirmed his reputation as an easy money man.

The Federal Reserve announced it would continue its policy of “quantitative easing”-creating new money to buy bonds in an effort to push long-term interest rates down-until the unemployment rate falls below 6.5 percent. Basically, rates will be kept near zero until the jobless rate drops.

The Fed announced it would continue buying $40 billion a month in mortgage-backed securities and would start buying an extra $40-$45 billion in Treasury bonds each month. Read more at CNBC.

{Andy Heller-Matzav.com Newscenter}

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3 Responses to “Fed to Keep Low Rates”

1. Comment from Hot air
Time December 14, 2012 at 3:46 PM

i don’t get this, the Government is borrowing money from itself????

2. Comment from juda
Time December 15, 2012 at 5:35 PM

@1 exactly as long as u dont get it were safe

3. Comment from Charlie Hall
Time December 15, 2012 at 8:21 PM

Hot Air,

Here is the way this works:

The Federal Reserve buys government bonds, thus lending the government money. So does the Social Security system. In fact, other government agencies hold almost 40% of the national debt; discounting that, the national debt is more like $10 trillion rather than $16 trillion.

The Federal Reserve then uses those bonds as backing for the “Federal Reserve Notes” that we all recognize as the standard US paper money. The US Treasury is also permitted to print some of its won paper money, called “United States Notes”, but it has not done so in 40 years.

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