{"id":6872,"date":"2010-11-05T05:30:07","date_gmt":"2010-11-05T09:30:07","guid":{"rendered":"http:\/\/www.geneveith.com\/?p=6872"},"modified":"2010-11-05T05:30:07","modified_gmt":"2010-11-05T09:30:07","slug":"creating-money-out-of-thin-air","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/","title":{"rendered":"Creating money out of thin air"},"content":{"rendered":"\n<\/head>

The Federal Reserve has taken some major action in an effort to stimulate the econnomy:<\/p>\n

The Federal Reserve escalated its efforts to get the U.S. economic recovery back on track Wednesday, again entering the realm of risky and untested policy in response to the worst downturn in generations.<\/p>\n

The plan to pump $600 billion into the financial system is designed to stimulate the economy in large part by lowering mortgage and other interest rates.<\/p>\n

Although the approach carries significant risks for both the economy and the central bank\u2019s credibility, the steps announced by Fed policymakers could represent the nation\u2019s best hope for breaking free of sluggish growth, especially with bold initiatives unlikely from a newly divided Congress.<\/p>\n

Fed officials concluded that growth is too slow to bring down the 9.6 percent unemployment rate and is at risk of staying that way for some time absent new action. They were also concerned that inflation has been running too low and were looking for a way to encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and help energize the economy.<\/p>\n

\u201cThe pace of recovery in output and employment continues to be slow,\u201d the Fed\u2019s policymaking panel, the Federal Open Market Committee, said in a statement. \u201cEmployers remain reluctant to add to payrolls. Housing starts continue to be depressed.\u201d<\/p>\n

The Fed usually manages the economy by adjusting short-term interest rates. With those rates already near zero, Fed officials had to dust off a strategy for boosting the economy that debuted during the darkest days of the financial crisis. The Fed plans to create money, essentially out of thin air, and then pump it into the economy by buying Treasury bonds on the open market.<\/p><\/blockquote>\n

\nvia Fed to buy $600 billion in bonds in effort to boost economic recovery<\/a>.\n

I am neither an economist nor an economist\u2019s son, so could someone explain how creating money out of thin air could possibly be a good idea?<\/p><\/div>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve has taken some major action in an effort to stimulate the econnomy: The Federal Reserve escalated its efforts to get the U.S. economic recovery back on track Wednesday, again entering the realm of risky and untested policy in response to the worst downturn in generations. The plan to pump $600 billion into […]<\/p>\n","protected":false},"author":1281,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[726,826],"class_list":["post-6872","post","type-post","status-publish","format-standard","hentry","category-economics","tag-economic-stimulus","tag-federal-reserve"],"yoast_head":"\nCreating money out of thin air<\/title>\n<meta name=\"description\" content=\"The Federal Reserve has taken some major action in an effort to stimulate the econnomy: The Federal Reserve escalated its efforts to get the U.S. economic\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Creating money out of thin air\" \/>\n<meta property=\"og:description\" content=\"The Federal Reserve has taken some major action in an effort to stimulate the econnomy: The Federal Reserve escalated its efforts to get the U.S. economic\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/\" \/>\n<meta property=\"og:site_name\" content=\"Cranach\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/cranachblog\/\" \/>\n<meta property=\"article:published_time\" content=\"2010-11-05T09:30:07+00:00\" \/>\n<meta name=\"author\" content=\"Gene Veith\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Gene Veith\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/\",\"url\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/\",\"name\":\"Creating money out of thin air\",\"isPartOf\":{\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/#website\"},\"datePublished\":\"2010-11-05T09:30:07+00:00\",\"dateModified\":\"2010-11-05T09:30:07+00:00\",\"author\":{\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/#\/schema\/person\/f9ca8670bcc51908a78994c0484dbfa1\"},\"description\":\"The Federal Reserve has taken some major action in an effort to stimulate the econnomy: The Federal Reserve escalated its efforts to get the U.S. economic\",\"breadcrumb\":{\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/2010\/11\/creating-money-out-of-thin-air\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Creating money out of thin air\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/#website\",\"url\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/\",\"name\":\"Cranach\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/#\/schema\/person\/f9ca8670bcc51908a78994c0484dbfa1\",\"name\":\"Gene Veith\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.patheos.com\/blogs\/geneveith\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/054d79faea5d476edd8f99e5f14fb17f?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/054d79faea5d476edd8f99e5f14fb17f?s=96&d=mm&r=g\",\"caption\":\"Gene Veith\"},\"description\":\"Gene Edward Veith, Jr. is a writer and retired literature professor, serving as Provost Emeritus at Patrick Henry College. 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