In response to:

Does the Fed Have Grave Concerns About the Economy?

Jerome49 Wrote: Oct 27, 2012 9:27 AM
What good are low interest rates if the banks aren't lending? The Fed may be trying to stimulate the housing market with low interest rates. The housing market is glutted with homes, but people who can afford are afraid to do so for fear of losing their job. And unless a prospective home buyer can come up with 20%, a steady job history and a credit history with no debt chances are the banks won't make the mortgage loans. Thanks to Dodd-Frank legislation, small businessesare having a hard time getting loans. The Quantitative Easings (1, 2 and 3) have flooded the market with currency, diminishing its buying power, bringing on inflation and harming those retirees living on a fixed income.
Joseph64 Wrote: Oct 27, 2012 2:25 PM
The banks aren't lending because the market is too risky, They are investing in short term securities and rolling them over until times get better and they can afford to take risks again. It doesn't help matters that many states passed laws forbidding banks from foreclosing on homes so why should they issue new mortgages if the mortgagee can walk away after a few months and they can't foreclose or evict them from the property?
Joseph64 Wrote: Oct 27, 2012 2:26 PM
oops, should say short term TREASURY securities.

On Tuesday, the Federal Reserve re-affirmed its commitment to using unconventional efforts to stimulate the economy.

In the latest Fed statement, the central bank said it would keep buying $40 billion in mortgage-backed debt per month to push interest rates lower.

The Fed also repeated its vow to keep interest rates near zero until mid-2015.

Although that may seem like the Fed is sending a signal to markets that they’re intent to drive the economy, no matter what the cost – that may not be what the Fed is really saying.

According to former Fed Governor Kevin Warsh the move isn’t a show of strength – it’s something far more ominous.

“I think the Fed...