WASHINGTON (MarketWatch) — Fed up with the anemic pace of hiring, the Federal Reserve promised Thursday that it would do whatever it takes to reduce unemployment.
The Fed stepped up its efforts to boost economic growth, opting for a round of quantitative easing, in a meaningful change in its tactics.
The Federal Open Market Committee said it would buy an additional $40 billion per month in mortgage-backed bonds, above and beyond the bonds it is now buying as a part of Operation Twist.
This is the QE3 that’s been talked about so much.
Significantly, the new bond-buying plan is open-ended, meaning that the Fed will keep buying long-term bonds until it sees a substantial improvement in the job market. If hiring doesn’t pick up, the Fed could step up the pace of bond-buying until it does.
The key phrase in the Fed’s statement was this: “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”
The Federal Reserve has basically declared that QE3 will happen. While Bernanke stated he will only do it if the labor market doesn't improve, there is no way it can while interest rates are artificially low. The economy is in shambled because of his/their actions and therefore needs to be ended, not encouraged. Sadly, there is no way to stop this from happening at this current moment. Expect another depression much deeper than the one the Fed originally created in the 30s.