you state that the federal reserve (if you mean something differnt with the term FED please say so) is buyng mortgages - are these purchses made with ‘thin air money’? if these mortgages are purchased with thin air - i would assume this is highly inflationary, yes or no please.
can you verify that the purchese of these mortgages is not directly linked to the FFR
this link http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm
states"
"The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet…"
this statement seems rather disjointed but it appears that the lowering of the FFR facilitates an increase in the federal reserves balance sheet. this increase being the buying of poopoo mortgages?
additionally,
"in an earlier post, poster jimmy says “the FFR… basically if the current rate that banks charge one another averages 5% and the Fed wants it to be 4.5% (i.e. they target 4.5%) then the way they get the interest rate down is buy boosting supply of the funds that can be loaned. This is achieved indirectly by purchasing assets in the open market (via the OMOs). The result will be that more money will find it’s way into the coffers of the commercial banks that hold balances with the Fed…”
is poster jimmy incorrect altogether or just incorect assesment of the ffrs role in the recent mortage debacles. if you know the recent mortgage crises to be fake, please say so.
thanks