Easy Money to Stop Flowing

Here is a short article from the Arab News about the Federal Reserves plan to STOP buying U.S. Treasuries;

The Federal Reserve in the US is preparing its final bond purchases.



While the Fed has said it will buy $50 billion of Treasuries, it will be the final series of government bond purchases in the $600 billion program it launched in November 2010 to prevent another recession.


The last spurt of the easy money flood will mean
the money that supported the US economy for two and a half years will shrink.

The financial sector will then receive only a fraction of money the Fed has been putting in.

It has been estimated the flow has meant around $100 billion to financial companies each month.

See it here; http://story.arabherald.com/index.php/ct/9/cid/3a8a80d6f705f8cc/id/795866/cs/1/ht/Fed-about-to-stop-easy-money-flow/

$100 billion each month going to financial companies??  Isn't that about how much money we were SHORT each month??  So wait a second...let me get my head around this.....the Treasury was selling Treasury Bills and Bonds to the tune of $100 billion each month so they could GIVE the proceeds to the financial institutions....and the Federal Reserve was BUYING $100 billion each month of Treasury Bills and Bonds.  Where did the Federal Reserve get $100 billion to BUY ANYTHING???

Answer;  they somehow created the money out of thin air.

What's funny is it seems that even the Arab News (not know to be the brightest bulb on the tree) understands what the end of easy money will mean.

I still love the answer that Bernie Madoff gave when asked where he came up with the idea to run a Ponzi scheme...and he said he came up with the idea by watching how the Federal Government works.