The Federal Reserve Funds 91% of 2009 U.S. Deficit

The Ultimate Shell Game: The Federal Reserve Funds 91% Of 2009 U.S. Deficit

January 11, 2010

Zero Hedge - In the current hodge podge of abstract finance, it is easy to get lost in the numbers and lose sight of the forest for the trees. Which is why we provide the ultimate simplification: In calendar (not fiscal) 2009, the US grew its budget deficit by $1.47 trillion. In the same time, the Federal Reserve grew its securities holdings from $500 billion to $1.85 trillion, a $1.34 trillion increase. Keeping it simple: 91% of the budget deficit increase in 2009, under the authority of President Obama, was funded by the... United States.

In 2009, the Federal Reserve Bought 80% of U.S. Debt?!

Fed Continues to Monetize Debt

August 12, 2009

AP - ...The central bank also held a key banking lending rate at a record low near zero and again pledged to keep it there for "an extended period"...

The Fed said it would gradually slow the pace of its program to buy $300 billion worth of Treasury securities so that it will shut down at the end of October, a month later than previously scheduled. It has bought $253 billion of the securities so far.

The program is aimed at lowering rates on mortgages and other consumer debt, a move to spur Americans to spend more. But its effectiveness has been questioned by some on Wall Street and on Capitol Hill who worry that the program makes it look like the Fed is printing money to pay for Uncle Sam's exploding deficits.

Meanwhile, economists predict the Fed will leave its target range for its banking lending rate between zero and 0.25 percent through the rest of this year. The rationale: super-low lending will spur Americans to spend more, which would support the economy.

If the Fed holds its key rate steady, that means commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will stay around 3.25 percent, the lowest in decades.

It was the first Fed meeting since the economy has flashed more definitive signs of turning a corner. But dangers lurk.

Although consumer spending has stabilized, job losses, sluggish income growth, hits to wealth from tanking home values and still hard to get credit could make Americans cautious in the months ahead, the Fed said.

The Fed expressed confidence that its low rates and other aggressive actions so far will gradually help bolster the economy. Even so, economic activity probably will "remain weak for a time," the Fed warned...

While unemployment dipped to 9.4 percent in July, the Fed says it's likely to top 10 percent this year because companies won't be in a rush to hire.

The Fed didn't make any changes to another program that aims to push down mortgage rates.

In that venture, the Fed is on track to buy $1.25 trillion worth of securities issued by mortgage finance companies Fannie Mae and Freddie Mac by the end of the year. The central bank's recent purchases have totaled about $542.8 billion.

It also didn't offer signs about the fate of another program intended to spark more lending to consumers and businesses at lower rates. The Term Asset-Backed Securities Loan Facility, which had gotten off to a slow start in March, is slated to shut down at the end of December. Despite the TALF, many people are having trouble getting loans, analysts say. More recently, the program was expanded to provide relief to the commercial real-estate market...