Federal Reserve says it paid federal government record amount of $88.9 billion in 2012

  • Article by: MARTIN CRUTSINGER , Associated Press
  • Updated: January 10, 2013 - 11:18 AM
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davehougJan. 10, 1311:59 AM

Fed officials say the massive bond buying, known as quantitative easing, is needed until economic growth is stronger. - - would someone explain how quantitative easing = printing paper money without real wealth to back it up??? Doesn't printing money with nothing more than 'the full faith and credit of the US' to back it up cause inflation?????

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mylittleidJan. 10, 1312:19 PM

davehoug - "Doesn't printing money with nothing more than 'the full faith and credit of the US' to back it up cause inflation?????" ---- Yes, under normal circumstances. But these aren't normal circumstances. We are in a fragile, gradual recovery from one of the worst recessions our economy has ever seen. Quantitative easing is sort of like using a defibrillator. Under normal circumstances you wouldn't want to send 1000 volts through a person's chest. But if their heart has stopped and you need to get it beating again, it's a good idea. Of course, once the heart returns to a normal rythmn, you stop with the shocks. Which is what the Fed will do once the economy recovers.

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