On Thu, 09 Aug 2012 13:59:40 -0400, Spehro Pefhany
wrote:

On Thu, 09 Aug 2012 11:44:40 -0500, jim
wrote:



It received 1.3 trillion from bond buyers who understand
that the safest place to put their money is Tsy securities

AFAIUI, the Fed is essentially acting as a buyer of last resort,
buying very low interest longer term bonds since there are actually
not enough buyers who want US-dollar denominated longer term bonds.

Exactly. No one wants junk bonds at (less than) AAA prices.

They call this virtually unprecedented action "quantitative easing"
and it is hoped to improve (increase) inflation towards the target of
2%-ish, since zero interest rates and deficit spending have both
failed. They have bought $2.3 trillion dollars "worth" so far
(starting as the seriousness of the crash became apparent in 2008).

http://www.npr.org/blogs/money/2010/...sing-explained
(the comments are good too)

IMHO, it's a move of utter desperation and only tolerated because
nobody can think of anything else to do within the current system.

No one in the administration, anyway. As long as they're spending 45% more
than is being taken in, we'll be swirling the drain.