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Fed Announces (Tentative) End to Bond Purchases in October

Written by Robert Murphy on July 11, 2014

The recently released Fed minutes contain the following information on their plans to fully complete the so-called taper:

[P]articipants generally agreed that if incoming information continued to support its expectation of improvement in labor market conditions and a return of inflation toward its longer-run objective, it would be appropriate to complete asset purchases with a $15 billion reduction in the pace of purchases in order to avoid having the small, remaining level of purchases receive undue focus among investors. If the economy progresses about as the Committee expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following the October meeting.

Right now (July) the Fed is buying $35 billion of new bonds per month. (In other words, it is reinvesting the proceeds to maintain its holdings as existing Treasury and mortgage-backed securities mature, and then on top of that, the Fed is buying an additional $35 billion per month–$20 billion in Treasuries and $15 billion in MBS, or at least that was the official target; they bought $1 billion more in Treasuries last month and so are only buying $19 billion this month.) The current plan is that–so long as the economy doesn’t crash–the Fed will taper to $25 billion in August, then $15 billion in September, and then wipe out the remaining $15 billion in October. At that point, the current plan is that the Fed would hold pat, reinvesting the proceeds from maturing securities to maintain a fixed total of assets.

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9 thoughts on “Fed Announces (Tentative) End to Bond Purchases in October

  1. And their storybook and fairy-tale contrived market of near 17k Dow goes poof! These EVIL ROTTEN SCUM-SUCKING minions of satan are the most reprehensible habitants of this secular life they created for themselves. Difficult to pray for them, but I do.

  2. And we will witness the truth behind the lie of the Dow Jones and others. Because of the QE, stocks have been fraudulently held up with printed money. Prepare one, prepare all! The truth of this lie will be devastating to our fragile economy.

  3. Translation: We haven't a clue about how we are going to get out of the Bernanke Bubble without crashing the market. Maybe if we talk about it enough we can keep everyone confused and we'll just sneak out the back door. This is not going to go well. See my blog at http://cranky-conservative.blogspot.com

  4. Gerald Ladd says:

    They are only talking about not buying our own debt. It doesn't say anything about not suppoting the stock market. If they add that to the end of QE3, then you'll see a crash like no other.

  5. This should get very interesting to say the least! My money is on the fact that the stock market will take a sever crash dive, once QE is stopped! At the very least, the American people will finally see the ruse of this administration, once and for all. Once the truth is seen, it's over with! No amount of disinformation or propaganda will save it! NOTHING!

  6. 1baronrichsnot1 says:

    Roses and lollypops? economy continue to improve? They call improvement workers giving up looking for a job, and that in itself shrinks the workforce? Why when we get to 50 million people who have given up we will. probably be at full employment, but at that time real unemployment will be 18%. If the able to work population is 275 million. If at 200 million, then the rate will be 25% real rate. Is that a victory? We have a bunch of idiots running the country, they call it idiotocracy!

  7. 1baronrichsnot1 says:

    exactly! Essentially the gov't is supplying free notes ( i hesitate to say money)to big banks to invest in the market, that fills the hole they created when the bubble burst! I expect that the operation in Burma will take over and print fiat, and SDR swaps for the worthless dollar notes, and make the banks money worth something, our money will be azzwipe!

  8. 1baronrichsnot1 says:

    This economy won't fly on its own. The feds meddle with it too much, business and entreprenuers don't know what to expect, too much regulation and proposed legislation, too many tax hikes, too much gov't interference, too much meddling in the lives of its citizens, to many mandates that violate the citizens rights to their religion. The economy will not lift off, maintain itself, or present a future for the american people!

  9. peleus212 says:

    They have not posted the real unemployment figures ever and the never ending punch bowl that is feeding the DOW has to stop. Yes it will be rough but the market will do its' own self correction and start the recovery on its own.

    What are the real unemployment figures [not what WH has been saying] among white, black, latinos, kids, etc. The sunshine and lollipops the WH has been saying has been a snow job since day one. Until you confront the real issues you can't really fix anything.