That's grammatically complicated, so let's see if we can spell this out.
The Administration and the Fed make a "sale" when you buy goods or labor. If you're a company, they want you to buy labor - hire people. If you're an individual, they want you to buy things - houses, cars, appliances, llama food, whatever. The economy is in the tank because you're not buying. In fact, some of you are selling - selling houses, selling labor (firing people) and selling stocks. Working with the Administration, the Fed has a new plan to help you make the "buy" decision.
The latest move by the chairman was a decision to dramatically recast the Fed's $2.65 trillion securities portfolio in an effort to reduce long-term interest rates. The Fed plans to shift its holdings so it will have more long-term U.S. Treasury bonds and more mortgage debt than previously planned. It hopes the lower rates will boost investment and spending and provide a shot of adrenaline to the beleaguered housing sector.Just how this is supposed to work is beyond me. Interest rates of all durations - long, short, medium, microscopic, galactically huge - are all near historic lows. We just refinanced our house and we're now practically borrowing money for free. We're paying about 4% or somewhere around there. Going from 4% to 3% isn't going to make me go out and buy a house. Interest rates are now irrelevant. Just look at this.
- Payment on a $250,000, 30-year loan at 4%: $1301.87
- Payment on a $250,000, 30-year loan at 3%: $1162.34
They've been trying this same thing for a few years now and it's not working. They keep lowering interest rates and borrowing and spending and nothing's happening. It's like they have no idea at all why you aren't making that "buy" decision.
The only thing they refuse to do is to drastically cut regulations and surrender power to you.