FED Buys Mortgage Bonds, Promises To Keep Interest Rates Low – Are They Addressing The Real Problem?

During the week the Fed announced a plan to buy 40 billion dollarsof mortgage bonds monthly. By relieving banks of these mortgages, they hope stimulate more lending from banks in the hope that it will allow consumers to spend more. In addition, the FED has promised to keep interest rates low, even if the economy is thriving, thereby creating a situation where people can invest the money they are making due a recovering economy knowing that they can still take advantage of the rates that were slashed due to the economic collapse. As a result stocks rose.

Like I said, I am not an expert, but this seems to be the same type of practices that got the country into trouble in the first place. On the surface rising stocks seem to benefit all of those with 401ks ect, but in reality rising stocks help the super wealthy significantly more then the middle and lower classes. These types of moves are all designed to get American’s to feel more secure, and have real estate price rise so that we can spend more. Sound familiar? They do not address the fact that the price of homes, fuel, food, and just about everything else have risen to unsustainable prices due to inflation. The problem is not that home prices are falling, but that current home prices are unrealistic when compared to the average income of a middle and lower class family. As the FED made this move inflation rose as well. That’s the bubble forming again people. To compensate families now have both parents working, if this trend continues, families are now going to have to put the family pets to work. Dogs and cats are lazy, it is about time they earn their keep no? Economists are either missing or ignoring, the real danger of the game they are playing. They are eroding the foundation of the American family. It shattered wealth and self-esteem of the lower class, and it is doing the same to the middle.