Attention Economy


Thursday, August 26, 2010

Fed - Money Magic

How the Federal Reserve bought $1.25 trillion (or more accurately $1,249,999,999,999.39) of mortgage-backed bonds: http://www.npr.org/blogs/money/2010/08/26/129451895/how-to-spend-1-25-trillion
Interesting highlight:
“The Fed was able to spend so much money so quickly because it has a unique power: It can create money out of thin air, whenever it decides to do so. So, … the mortgage team would decide to buy a bond, they’d push a button on the computer — "and voila, money is created."”


Also, the Fed's near zero interest rate policy is not cost free and dangerous in the long-run
http://freakonomics.blogs.nytimes.com/2010/08/25/why-we-should-exit-ultra-low-rates-a-guest-post-by-raghuram-rajan/?pagemode=print