A 3rd round of Quantitative Easing by the Fed was announced by Bernanke last week. Their plan is to buy bonds to bring interest rates down for an indefinite period of time. Bernanke also announced extending Operation Twist to the end of the year.
Does Bernanke really think that lower interest rates is what will correct the housing market? We are already at record low interest rates… What the housing market needs is the economy producing jobs which will create demand for more housing!
The definition of insanity is doing the same thing over and over and expecting different results. The Fed is actually trying to re-inflate the housing bubble.
Hang on tight, I think we have a rough road ahead when the side effects kick in. Or maybe better described as a really bad hang over or delirium tremors.
I still believe owning your home is better than renting, especially at these low rates – but I would caution you on any speculation purchases.
If you want great insight into the insanity of this and the potential negative effects of all this printing of money, check out Peter Schiff’s video. This is a guy that I cringe when I listen to what he has to say, not because I think he is wrong – but because I think he is correct. Peter Schiff called this move a political move, not an economic move.
UPDATE: Peter Schiff Essay on “Operation Screw”