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Re: gov't shutdown.... :(

Posted by baseball55 on October 14, 2013, at 21:25:20

In reply to Re: gov't shutdown.... :(, posted by sigismund on October 14, 2013, at 17:00:06

> > We've been there, done that. It was called the Great Depression.
> What is now happening in Greece and Spain is said to be much worse than that was. The Euro is kind of like the gold standard was. ?

I have been working on an article with a colleague comparing the euro with the gold standard. QE (quantitative easing by the Fed) simply means that the Fed buys long term assets rather than short term assets. Basically, whenever the Fed buys assets, it creates new money for the banks to hold -- hopefully the banks will then lower interest rates and lend the money out to businesses, which will invest in new equipment and hire more workers. Traditionally, the Fed has worked on the short side of the market -- buying securities that will mature in less than a year. So short term interest rates fall, but businesses looking to borrow for new plant and equipment need to borrow longer term - often for several years. So the Fed has been working on the long side of the market (buying assets that don't mature for 10 or more years) to try and force long-term interest rates down.

With QE, 30-year mortgage rates fell for a while to 3.5%. The lowest rate since the 1930s.




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