Shorter Bernanke: We want to pump YOU UP. Here’s the long version:
The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisifed that economic conditions, primarily in unemployment, improve.
“The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the Open Market Committee said in a statement.
In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. It also will continue its policy of reinvesting principla payments from agency debt and mortgage-backed securities back into mortgages.
By the time this is over, the Fed’s balance sheet is going to make Mr. Creosote look like Karen Carpenter.