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Wednesday, September 29, 2010

Will the Fed try to lower interest/mortgage rates in November?

It's call qualitative easing, and it's nicknamed QE2 and this would take place maybe on November 3rd (after election day).  The Fed is running out a ways to simulate the economy and this might be considered a risk way of doing it.

Basically, you are printing money to purchase US Treasuries to lower interest rates.  However, if you do it wrong you can trigger inflation or really stagflation.  It would be similar to the 1970's of high unemployment and high interest rates.

Exit Question: Are people really going to purchase homes when inflation kicks in?  Will there be as many households to support a recover?  What will the impact be with home owners with ARMs and Option ARMs?

It's not light reading, but here is the article.

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