"One top consideration is an increase in the pace and size of a $600 billion program to buy bonds issued and backed by Fannie Mae and other operations.... Other measures could include everything from purchases of Treasuries to corporate bonds.... The Fed has already agreed to work with the Treasury on implementing a program to revive consumer and business loans, which the Obama administration has said could reach $1 trillion"
Yeah, a trillion dollars of your money loaned back to you.
"Fed hears calls to ramp up asset purchases" by Bloomberg News | March 18, 2009
WASHINGTON - Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets, as the economy and job market have deteriorated further since they last met.
The Federal Open Market Committee, gathering yesterday and today, needs to redouble its efforts, Fed watchers said. The central bank's balance sheet has shrunk 17 percent from a $2.31 trillion December peak.
"It takes massive balance-sheet expansion to generate significant easing in financial conditions," said Andrew Tilton, an economist at Goldman Sachs Group Inc. who used to work at the Treasury. "More needs to be done."
This week's meeting could mark a shift toward more aggressive monetary expansion to fight deflation after demand waned for many of the Fed's existing programs. One top consideration is an increase in the pace and size of a $600 billion program to buy bonds issued and backed by Fannie Mae and other operations, analysts said.
Isn't that going to cause the exact thing they claim they are fighting?
Other measures could include everything from purchases of Treasuries to corporate bonds, Tilton said. The Fed has already agreed to work with the Treasury on implementing a program to revive consumer and business loans, which the Obama administration has said could reach $1 trillion.
"The more they expand, the better markets are going to be," said Richard Schlanger, a vice president who helps invest $13 billion in fixed-income securities at Pioneer Investment Management in Boston, referring to US central bankers.
Total assets held by the Fed stand at $1.90 trillion, down from a record $2.31 trillion in December. Credit outstanding in four Fed liquidity programs, such as loans to banks and primary dealers and a facility for commercial paper, has shrunk $118 billion in two months.
"They need to make it clear they want to move aggressively," said Ethan Harris, cohead of economic research at Barclays Capital Inc. "The economy warrants a faster move and the markets do, too."
