Barack Obama has promised the country that he’s pulling the economy out of the ditch - but if that’s the case, why does the Fed need to keep bailing America out? The latest bailout came today when the Fed announced they would do QE3. The really scary part is there was no set amount. Instead it was left ‘open ended’ to spend in perpetuity.
In a statement, The Federal Reserve revealed it will spend $40 billion a month to buy mortgage-backed securities for as long as it deems necessary to stimulate the economy and reduce high unemployment.
The Fed added, "If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability."
The statement was approved on an 11-1 vote. The lone dissenter was Richmond Fed President Jeffrey Lacker, who worries about igniting inflation.
The Dow Jones industrial average was up 15 points for the day just before the announcement at 12:30 p.m. Eastern time. It had surged 105 points within minutes of the announcement, then gave up some gains to be just 35 points higher.
The dollar dropped against major currencies, and the price of gold shot up about $16 an ounce, roughly 1 percent, to $1,750.
Because Glenn was on radio before the announcement of QE3 was made, he has not yet had a chance to respond. However, he did warn that people need to have cash on hand and pay close attention to what is happening with the Fed and the economy.
"May I make one more recommendation. Have cash on hand, please. Please have cash on hand. We have recommended this for a while. Please have cash on hand. I just saw an amazing stat. Right now 8.2 or 8.7% of the American population has pulled their money out of banks. They say I'll cash my check at check cashing places, I will keep my own cash, I'm closing my checking and savings. Almost 10% of the U.S. population is now bankless because they don't trust the banks. That's significant. Especially when you see what's going to happen with Bernanke today. Hopefully Bernanke says he's not going to print more, but the dollar is already losing value this morning. Warning," Glenn said.