Fed Pulls Trigger on Massive Stimulus : Small Time Blog

Fed Pulls Trigger on Massive Stimulus

by Bradley Voight on 09/13/12

Ben Benanke, the chairman of the federal reserve board of governors announced an aggressive plan to stimulate the economy today which includes buying $40 billion in mortgage backed securities per month and a pledge to keep interest rates near zero into 2015. The kinder term for this is quantitative easing; the English term is money creation out of thin air to expand the Fed's balance sheet.


Inflation is almost sure to follow, especially in the commodities sector where investors will plow cheap borrowed money into gold, silver, oil and the "soft" commodities like sugar, wheat, and corn. This could be a wild ride as we are in uncharted waters with our debt situation and this new stimulus package. The Fed itself could not tell you the end result of this latest action and I am just a shadetree economist so I can't tell you where this is going with certainty but I can say that prices at the pump may be leaving the $3 realm not to return there anytime soon. 

One good thing is that base metals prices are rallying and should continue to do so over the next few months. Smalltime will be here to help you weather the storm with timely information about living in an inflationary economy. 

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