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Tag Archives: treasuries

us_securitiesExpansionist monetary policy, but I did not know it was not commonly used.

The Fed surprised investors on Wednesday by announcing it would buy $300 billion worth of these U.S. Treasuries for the first time since the early 1960s as part of a move to inject an additional $1 trillion into the U.S. economy by also purchasing more U.S. mortgage and agency debt.

The news spawned higher demand for Asian securities and sent the value of the dollar into free-fall. The plan is meant to feed into the economy by lowering borrowing costs and attracting investors back to work. It seems to have spurred some optimism,¬†which is good in itsself, but I don’t know if it will work. Will the sellers of these securities turn around and spend the cash? Or find someone who wants to borrow it?

What do you think?