Federal Reserve begins QE3 Securities Investment Plan
Now that the economy is starting to ease up on foreclosures, the Federal Reserve has announced its plan to buy into securities from real estate that they think will be a good investment. Unfortunately, they did not foresee the unemployment rate continuing at such a high pace. How will people continue to pay their mortgages if there is little hope for improvement in the job market?
The Federal Reserve announced plans to unleash more stimulus Thursday, in its third attempt at a controversial program to rev up the U.S. economy. The policy, known as quantitative easing and often abbreviated as QE3, entails buying $40 billion in mortgage-backed securities each month. The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months.
The Fed has been trying to stimulate the economy for over three years now, and has exhausted its usual tool by keeping interest rates near zero since late 2008. Quantitative easing is an unconventional way of trying to lower rates further.
But given that the unemployment rate has remained above 8%, the Fed is still not satisfied.
"The weak job market should concern every American. It imposes hardship on people and a waste of human skills and talents," Fed Chairman Ben Bernanke said in a press conference later Thursday.