What does $600 billion mean for you?

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The Federal Reserve recently purchased $600 billion in treasury securities, and the stock markets rallied the next day.  But, what impact will this have on the average consumer?  The Fed purchased these additional securities to drive down long term interest to increase the amount of home refinancing, fight of the fears of deflation, and spur consumer spending.  However, it is still not clear whether the purchase will have as strong of an effect as was intended because of the continuously high unemployment rate and the large amount of existing consumer debt.

Timing was also important in last week’s large purchase.  The strong turnaround in the House and weakening of the Obama administration after last week’s election will most likely slow down the fiscal stimulus for the next two years. Therefore, this large economic stimulus came at an appropriate time. 

~Karan