I did not notice any Reserves of this magnitude in FED's balance sheet recently for this kind of shopping spree. So the money will come from issuing new debt by selling treasuries and plain vanilla printing money. In "normal economy" if corporation is taking more debt to buy assets which nobody wants in the market, issuing new shares in order to buy the same low quality assets, losing its revenues in the form of taxes because of recessions its shares will go down. US Corp. manage from July to prove otherwise, its shares US Dollar was going up in value against almost all other currencies and its Debt was selling like hot potatoes in a cold day.
I will say just five the most dangerous words in investment: "This time it is different". It was "different" before with Google GOOG, Subprime, All banks and markets DIA, SPY, QQQQ, but only for a little while and then reality has stricken deadly.
It will be the same this time with US Dollar and Treasuries Bubble, the higher they go the faster they will fall back to reality.
"Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
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Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary."
We know what the "New" guy is going to do: Reinflate, money, garantees...everything...Gold will give an answer.
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