August 13, 2010 Reading Time: < 1 minute
“Typically, the Fed can lower interest rates to encourage Americans to borrow money and spend it, invigorating the economy. But the benchmark interest rate controlled by the Fed has been almost zero for more than a year now.

The Fed this week took a new step by announcing it would use the proceeds from its huge portfolio of mortgage securities to buy government debt. The idea is to make cheap credit a little cheaper, particularly for things like mortgages.

The problem there: Americans who are worried about their jobs, not to mention volatility in the stock market, don’t want to borrow. They saved 6.2 percent of their disposable income this spring. Before the recession, it was more like 1.2 percent.” Read more.

 
“In a Sluggish Economic Summer, No Easy Fix Ahead”
Jeannine Aversa
The Associated Press, August 13, 2010.
 
Image by Simon Howden / FreeDigitalPhotos.net. 

Tom Duncan

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