A Trillion More Dollars To Boost US Economy
 

The US Federal Reserve says it will buy almost $1.2 trillion (£843bn) worth of debt to help boost lending and promote economic recovery.

It said it would start buying long-term government debt and expand purchases of mortgage-related debt.

The size of the move surprised investors, causing the Dow Jones stock index to jump almost 200 points.

The Bank of England has already begun buying government debt to expand money supply - known as quantitative easing.

The Federal Reserve said it hopes the measures will boost mortgage lending and the struggling housing market by lowering interest rates on mortgages and other forms of consumer debt.

"This is not only going to keep mortgage rates low for a long period of time," said Greg McBride, a senior financial analyst at Bankrate.com.
"The mere announcement may produce a honeymoon effect and bring mortgage rates down to even lower levels in the coming days."

The US central bank also kept interest rates unchanged at close to zero after its two-day policy meeting.
In December, it cut rates as low as they can go - to a range of zero to 0.25%.

The Fed's unprecedented measures come as central banks around the world are grappling with how to fight the worst recession since World War II.

Japan said earlier on Wednesday it would step up its purchases of government debt.

"Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending," the Fed said.
All tools

The Fed said it would employ "all available tools" to promote economic recovery.
The biggest surprise was the announcement that the Fed would buy up to $300bn worth of government debt, known as US Treasuries, over the next six months.

It also said it would buy an additional $750bn of mortgage-backed securities to boost mortgage lending, bringing total purchases of this type to $1.25 trillion.

It added that it would buy a further $100bn in debt issued by government-sponsored agencies like Freddie Mac, which supports the mortgage market.

"This is a pretty dramatic move," said James Caron, head of global rates research at Morgan Stanley in New York.

The Dow Jones industrial average gained 90.88 points, or 1.23%, to end at 7,486.58 points, reversing early losses.

The move boosted banks and financial shares, with Citigroup up 23% and Bank of America vaulting 22% higher.

However, the announcement hurt the dollar, which hit a two-month low against the euro on fears that the measures would undermine the currency.

The yields payable to holders of government bonds also fell sharply.

The yield on the benchmark 10-year Treasury note fell to 2.5% percent from 3.01% - its biggest one-day slide since the Wall Street crash of 1987.
Canadian Press

I can just see how much taxes are gonna go up for the American people 5 years down the road

CAD back to par soon I guess

YAH

How is that a good thing?

How is that a bad thing?

Everything has trade offs. What maybe good for some people is worse for others.

^ lol did u get that from rense.com?

its not, but there is nothing we can do.

USD dropped more than a cent against CAD today already

i can go back to buying stuff from the states for dirt cheap

i can buy more USD for cheap and invest with a US savings account

im sure there is more...but those are my 2 main bonuses

i'm really wanting things to be at par again, the sooner it breaks the sooner i can buy my car from the states:thumbsup:. Im guessing it will be par quite soon, since investors will probably more oil/gold instead of a shakey US dollar

sweet.. since i'm don't have to worry about the bad trade-offs of our dollar being on par with the us, i can enjoy cheap shopping in the states..

cheap dollar is great for us ebayers :)

Damn, I should've waited before buying some shit online.

Obama won't need 4 years to destroy the country. it'll be done long before his term is up, if he makes it that far.

A near parity of the dollar means more Cruises for me!!!!

dollar on par = canada funding the US economy.