The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a bid to boost growth and reduce unemployment.
This is another failed attempt at policies that will lower interest rates, and stimulate borrowing. After all if the bank can sell worthless paper to the Fed, banks might as well make more loans.
Well, banks are doing just fine already.
What the Fed should have done is held fast until after the election. I now know that Tim Geitner is putting on a show at the IMF summit, but the United States will be in for a shock to the system if we change Presidents. I’ll talk more about the Tea Party politics that the Republican canidates are bringing, but for right now let’s focus on how this administration has propped up the economy.
No country has used austerity well this time around. The ones that have are in much more serious trouble than we are. Most governments who can afford to have used stimulus to keep the economy chugging along. We used stimulous extensively to develop more industry, such as green energy, bought some car companies, consolidated banks, and bought up worthless mortgages.
In my opinion, the last couple of items which is to consolidate banks, and buying worthless mortgages is the mistake. I think the government should have let banks fail, and put the burden of bankruptcy on them. Well, we may get to see that happen if this stimulus goes away.