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The Federal Reserve will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation.

Fed to Buy Extra $600 Billion of Treasuries to Boost Growth

People need to understand this type of monetary policy is not normal. The Fed would not be conducting this activity if things were fine. So the Fed is treading on unknown and uncertain ground. There are a number of links with this plan which are unknown and untested. There is a “known” to this plan – it will raise the amount of money in the system by $600 billion. This money is not “wealth” that has been created by production. Instead, it is printed money with no real asset backing. That much we know. What we do not know are the short-term and long-term economic effects of this adventure. At the least, we are sure this plan would produce a raised eyebrow from Milton Friedman!

QE2 – What is the Fed Doing? Will it Work?

And a very good explanation of QE by Glenn Beck:
Glenn Beck Explains The Latest Iteration Of Quantitative Easing

Posted: 2010-11-05 14:03:23

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