Bernanke says stronger economy means Fed could slow bond buying this year, end it next year

  • Article by: MARTIN CRUTSINGER , AP Economics Writer
  • Updated: June 19, 2013 - 7:10 PM

WASHINGTON — In a move that could send interest rates higher, Fed Chairman Ben Bernanke ended weeks of speculation Wednesday by saying the Federal Reserve will likely slow its bond-buying program this year and end it next year because the economy is strengthening.

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theagonybhoJun. 19, 13 2:36 PM

Thank god we dont need 85 billion a month in bonds to prop up the stock and housing market. Let them tank and self correct, if we had done this 3 years ago we would be fine now.

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momoloozJun. 19, 13 2:39 PM

$85 billion in monthly bond purchases...where does this money come from? Or is it just vapor printed by the FED?

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mauianJun. 19, 13 2:55 PM

Ben has no choice BUT to continue QE. The Fed, the ECB, the Bank of England, the Bank of Japan, et al, own $10 trillion in bonds. China, the Oil nations, etc, own another $10 trillion. Between them they have locked up $20 trillion, equal to roughly 25pc of global GDP. Think about that for a minute. The Central Banks money printing is 25% of GLOBAL GDP. Take that away and what happens? Won't do it because they CAN'T do it.

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Truckman182Jun. 19, 13 3:17 PM

The house of cards continues to be built....

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kilofoxJun. 19, 13 3:18 PM

Face it, we are screwed either way. The Fed is propping up the economy by pouring billions into the economy. The day of unlimited money is coming to an end. It may not be a pretty picture in a couple of years.

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jd55604Jun. 19, 13 3:23 PM

You're either with Ben, or you're with the terrorists!

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buskahJun. 19, 13 4:58 PM

"China, the Oil nations, etc, own another $10 trillion. Between them they have locked up $20 trillion" ------------- How can this be? As of this minute the national debt is $16.74 Trillion. The US must suffer from some sort of ghost debt.

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brotherkennyJun. 19, 13 8:36 PM

The central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions, thus increasing the monetary base, the money available to be lent. This encourages people to assume debt because of the low interest rates. It is the creation of money, but not to assume government debt, but rather to inject money into the economy. There is no real basis for it's creation and the risk is that it will increase inflation too high. The entire action is outside the government. The federal reserve is the controlling entity for private banks and is private itself, it is not part of the government. Because it drives the interest rates low it generally drives interest on personal savings and CDs and bonds lower thus encouraging investors into the riskier stock market. So, it encourages debt by private people and for people with investment money it pushes them to take more risk. It helps to prop up corporations, stimulates the economy and increases the federal tax revenues but because there is more money available that is not based on real assets it devalues the dollar, meaning inflation. Your dollar buys less than it did. So, it benefits corporations and the federal government and is bad for working people except that you can get a job with a corporation, and buy less with the money.

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potter101Jun. 20, 1312:37 AM

theagonybhoJun. 19, 13 2:36 PM Thank god we dont need 85 billion a month in bonds to prop up the stock and housing market. Let them tank and self correct, if we had done this 3 years ago we would be fine now.*************************There are many examples in Europe showing the foolishness of your Idea. Why 3 years to fix it. since your guessing you would of made a stiffer opinion by saying it would have turned around in one year. I mean pick a number.

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potter101Jun. 20, 1312:46 AM

buskahJun. 19, 13 4:58 PM "China, the Oil nations, etc, own another $10 trillion. Between them they have locked up $20 trillion" ------------- How can this be? As of this minute the national debt is $16.74 Trillion. The US must suffer from some sort of ghost debt.*********************Because your payout per year is only the interest rate that these debt instrument are sold at.. Secondly the money they get back is the money they gave you to buy the note , bond, instrument in the first place, plus interest ,which is nothing. American government debt is so highly respected in the world that often purchase from one country to the next , the payment that is demanded is American debt instruments.BOND NOTES ETC.

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