Q2E ends, but Fed plans to buy another $300 billion in government debt

By Sam Foster

As Obama begins his, "I beat the recession" routine. Ben Bernanke seems to think that Q2E wasn't enough. The Fed may buy an additional $300 billion over the next 12 months:

While the $600-billion purchase program, known as QE2, winds down, the Fed said on June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system.

The central bank, which injected $2.3 trillion into the financial system after the collapse of Lehman Brothers Holdings in September 2008, will continue buying Treasuries to keep market rates down as the economy slows. The purchases are supporting demand at bond auctions while President Barack Obama and Republicans in Congress struggle to close the gap between federal spending and income by between $2 trillion and $4 trillion.

Looks like Ben didn't get Obama's text about the recession being over and all. Also, this round of buying may not be linked to "printing money," but they are still injecting yet another heap of money onto the already cresting money supply.

As Arthur Laffer once said, "There's no such thing as precision monetary policy."

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