And those of us with 401ks for retirement got a lot more hosed.

Not surprising at all since they have run out of bullets a long time ago. They are essentially buying treasury bonds to prevent a total collapse of the bond market. Japan and China have had enough and are no longer buying bonds in the numbers they bought previously.

This latest Fed action will do nothing to spur the economy. Until the banks are forced to mark-to-market their housing inventory and do a complete reset, there can be no recovery. Of course most banks will be proven bankrupt, so nobody wants to do it. If it wasn't for drug money laundering and the Fed's funny money, they would already be out of business

Cool! On the count of three, everyone say "Vie-mar".

In extending its campaign of novel efforts to shake the economy from its torpor, the Fed said that it was responding to evidence that there was a clear need for help.

The problem here is the money from QE1 and QE2 clearly ended up on bank balance sheets, and not in the economy. QE3 will be no different. Buy bank stocks.

The most "novel" idea I've heard in a while was for the treasury to start charging banks interest for parking their money there. Rather than paying .25% or whatever it is, start charging them 2% for the privilege of keeping their money safe. Then let's see where all the money goes.

Mr. Grumpy, are you suggesting that the Tea Baggers will play the role of the NSDAP?

The U.S. bond market is still very strong, and inflation is low. So it seems that the Fed is doing the right thing by not taking advice from the economists commenting on this blog.

Y'all seem to be worrying about the wrong things.

Actually, an article in the Economist this morning said the Fed should do just this.

Hey Richard, "Inflation is low" ?

You must be using "new math" or something. Here is a source for the real rate of inflation, which is currently around 13%:

http://www.shadowstats.com/alternate_data/inflation-charts

And yes the bond market is currently strong, but that can (and probably will) go South really, really fast.

"The central bank said in a statement that the program was aimed at reducing the cost of borrowing for businesses and consumers, including the cost of mortgage loans. It hopes that the lower rates will encourage companies to build new factories and hire more workers, and consumers to start spending again on homes and cars and clothes and vacations."

That's the ticket! Back to spending what we don't have and overextending ourselves while enriching the banking industry. Never mind that people without jobs HAVE to borrow or they don't HAVE anything to spend.

We;ve already seen global businesses sitting on millions/billions in cash, and not hiring in the US. Folks, they no longer need us as consumers here in the good ol' USA for the most part. India, Pakistan, China, parts of S. America - that's where the markets are. I do like Bean's idea to tax the cash holdings over some fairly low threshold. Maybe that would also help kickstart some spending in the US. Or, the money just goes to another entity in another country.

OK, this is the definition of insanity - Doing the same thing and expecting different results.

They made long-term money cheaper. Average Joe doesn't have any more money. Yet the banks and companies have plenty of money. They just don't want to tie it up in any long-term investments like plant or expansion.

Look at gold, T-bills or the stock market (at least before today). Those are all going up in price for no real reason besides whoever bought can sell tomorrow and get their money back with the chance of some return greater than lending it out.

BTW - Not that banks look any better because of all this thrashing by the Fed:

http://www.cnbc.com/id/44613160

Still looks like the "too big to fail" approach hasn't changed one bit since 2009.

F'em all. U-pick:

The End Of The World As We Know It (And I Feel Fine) ~ R.E.M. (Pinkpop, 1989)
http://www.youtube.com/watch?v=dKdsV9HixbQ

Daysleeper
http://www.youtube.com/watch?v=dciDcRZovP4

Turn You Inside Out (Live)
"This one goes out to the Exxon Corporation"
http://www.youtube.com/watch?v=H-LAnnu09tk

World Leader Pretend ~ (Pinkpop, 1989)
http://www.youtube.com/watch?v=NDhOKNlbuwM

Everybody Hurts (Stirling Castle, Scotland)
http://www.youtube.com/watch?v=W7g5YKEEPoI

Stand ("Green" tour film, 1989)
http://www.youtube.com/watch?v=62ANpt9lI4w

The 3.8 percent inflation rate of the past 12 months is not what's hurting Americans. If anything, this move by the Fed is too modest to meet the task.

Pete - when people are either unemployed or not getting pay raises if they are employed or their raises are under 3%, then, in fact, 3.8% is big. Real income is declining but perhaps you don't see the bigger picture. You can Google and see that the relative position (adjusted for inflation) of the middle class income is declining.

"this move by the Fed is too modest to meet the task."

Yuu're beginning to sound like 99% of the politicians (and Krugman) - The noly reason things aren't working is because we (govt) haven't spent enough.

I'd think after $1T+ and no results, we may want to reconsider. In addition, based on interest rates, there isn't exactly a tight money situation.

The 3.8% inflation rate is a figment of the government's imagination.

If you eat protein, use energy, wear cotton, take medicine, or pay health insurance premiums, you have experienced much higher inflation than any government statistic has captured.

Understating the CPI is the best way to keep Social Security solvent without passing any new legislation.