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Unsurprisingly, The Fed To Continue Money Pumping

January 31, 2013 by  

Unsurprisingly, The Fed To Continue Money Pumping

At a Federal Open Market Committee on Wednesday, officials at the Federal Reserve said they would continue to pump money into the economy via an $85 billion bond-buying stimulus scheme, despite a stall in economic activity in recent months under the same policy.

Citing its statutory mandate, the Fed said that the continued stimulus is an effort to maintain price stability and encourage employment growth, the latter of which must improve substantially before the central bank will back off of its ongoing stimulus.

From an FOMC statement:

The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.  Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

As unemployment rates are expected to remain around 7.8 percent for the month of January, Fed officials say that they will hold interest rates near zero until unemployment is down to 6.5 percent. Central bankers say the only way the policy will change is if inflation climbs above 2.5 percent in coming months.

The Federal Reserve’s balance sheet is estimated to have expanded in excess of $3 trillion in recent years. Recent meeting minutes of the FOMC show signs of disagreement between members of the committee over how much longer the central bank can continue quantitative easing without major and obvious economic consequence.

Some economic experts say that Americans can expect soaring food and fuel prices as early as 2014 if the Fed policy doesn’t produce dramatic economic growth this year.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Warrior

    Bubble, bubble, toil n trouble! I say, in honor of all “sandy’s”, ben should tell timmy to start “minting” sand dollars. Anybody remember those things when you were a kid? Not worth anything but nice to look at and collect.

    • Average Joe

      Kinda like FRN’s…nifty looking artwork…but that’s about it…
      Soon it will make great wall or toilet paper. Of course it does have cotton/linen…maybe we could all wear real “million dollar” suits…. ;)


  • Terry Bateman

    The Federal Reserve buys United States debt because nobody wants to buy United
    States debt at current low interest rates. Sound fed policy would let interest rates rise to
    the level where world investors would buy United States debt. Sound fiscal policy would
    reduce federal government spending across the board including entitlements 3% per year
    for ten years. Sound tax policy of eliminating all exemptions ,deductions,credits, exclusions and charging a flat 20% tax on all income (individual,corporate,farm, dividend,
    capital gains, and estate) would generate a lot more revenue with a lot less trouble.
    The federal budget would be balanced, and serious paydowns on the federal debt would
    begin, and less interest would be paid on federal debt at higher interest rates because
    there would be less federal debt and NO investor doubt about the full faith and credit of
    the United States Government.

    Now what, on the other hand, happens if the current policies remain for the next decade?

  • Randy131

    The Federal Reserve is not stimulating the economy! That’s a lie, which politiely is called propaganda, tell an untruth enough times and people will start believing it. The Federal Reserve is supporting Obama’s out-of-control spending, which the normal selling of US Treasury Bonds can no longer cover through historical investors who now have no faith in the US Dollar, so the Federal Reserve steps in and makes up the difference. Some would say that this is stimulating the economy, but in truth it is not, but is supporting all the welfare recipients, food stamp users, the huge increase in disability recipients since Obama has taken office, those collecting unemployment insurance which workers are not paying in enough to cover those out-of-work, the shortages in Medicaid and Medicare, and the difference in what Social Security collects each week and has to pay out each month, since the Social Security outgoing payments are more than the Social Security incoming taxes this last year. And none of it is going to stimulate the underperforming US Economy, which is in the position it is, because of the failed economic policies Obama continues to employ. Einstein once said that insanity is doing the same thing over and over again, and expecting a different outcome, which Obama keeps doing when it comes to our economy, and the Federal Reserve is covering his malfeasance, and driving up our national debt.


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