The Fed's Trillion-Dollar Monetary Stimulus

Today’s disappointing economic news—consumer sales last month grew less than expected—has fueled debate over whether Congress should pass another huge stimulus.  But another trillion-dollar fiscal stimulus won’t be politically possible. Not during a tough election year.

And, as Adam Davidson reports, the debate is moot for yet another reason: the Federal Reserve beat Congress to the punch.  This week, the Fed did something awfully similar to announcing a huge new stimulus.  Just without all the fanfare.

Over a year ago, the Federal Reserve bought an unprecedented $1.25 trillion worth of mortgage-backed securities.  The plan was to only hold the securities for a short period and then sell them.  But this week, the Fed announced: not so fast.  They are holding onto the securities and effectively easing monetary policy.

Listen to Adam Davidson’s full report on the Fed’s monetary stimulus.



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