The U.K. Telegraph is reporting some horrifying news that behind closed doors the Federal Reserve is considering purchasing more toxic assets. A lot more. To bring the total from $2.4 trillion to $5 trillion dollars.
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
Huge h/t to MTGM. A deflationary spiral, no surprise to anyone reading the government statistic report overviews posted here, or the fact the economy is slowing, yet is the answer to buy more toxic, worthless crap?
Someone explain that one to me.