We Said This Would Happen

The NY Times announced today that the FED will be buying the Treasury Debt. On July 10th we predicted this would be the next step! Frankly we did not think it would happen till late fall after the election. But the drunken sailor spending in Congress has driven it over the edge early.

As the Times states:

Instead, the Fed will reinvest the principal payments in longer-term Treasury securities.

The central bank said it would continue to roll over its holdings of other Treasury securities as they mature.

In its announcement, the Fed also left unchanged its benchmark short-term interest rate — the federal funds rate, the rate at which banks borrow from each other overnight — at zero to 0.25 percent, the level it has been at since December 2008.

In a new qualification to its previous statements, the committee said it still expected a “gradual return” to normal economic conditions, “although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”

Things will just get worse.