No Exit Strategy

clipped from www.qando.net So, the Fed, for the first time since the 1960s, is buying back long-term bonds as part of it’s new policy, announced today, of buying back $1.2 trillion in securities to pump out cash into the economy. With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy. To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. “[W]e simply do not see a viable exit strategy to all the money that is being thrown at the system” because there is no viable exit strategy.  We are either going to have serious inflation, or the Fed will have to tighten up so severely at some point in the near future that it will kill economic growth anyway. We’ve essentially reached the limits of our monetary policy tools with this action.