Fed Cuts Rates Half Point in Emergency Move Amid Spreading Virus (bloomberg.com) 145
The U.S. Federal Reserve delivered an emergency half-percentage point interest rate cut Tuesday in a bid to protect the longest-ever economic expansion from the spreading coronavirus. From a report: "The coronavirus poses evolving risks to economic activity," the Fed said in a statement. "In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point." U.S. stocks briefly reversed earlier declines before resuming their selloff, while the 10-year Treasury yield touched 1.09%. Fed funds futures are pricing more than a percentage point of central bank rate reductions for 2020, including another quarter-point cut in the first half of the year. The central bank also said it is "closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy."
This is what made America great (Score:5, Insightful)
There's a pandemic brewing, we can't test people to see whether they're infectious, but we can make sure that the economy won't have to suffer like the people.
Priorities are important!
Just what we need during an epidemic. (Score:5, Insightful)
So, instead of letting the market cool down and economic activity slow, the Fed is going to juice the market and try to force us into increased economy activity.
The more money people spend, the more goods and people end up moving around. That makes it easier for the viruses to spread. The CDC has failed to test and isolate coronavirus, and now the Fed is working to help it proliferate. Can the gov't get any more incompetent?
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Technically a 20% floor from the top is the next level.
Dow 1,000 here we come!
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Just following WHOs advice.
Economy First!
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Throw the ball to What -- who then throw's it to Idontknow? Triple play!
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Ironically...
> Market corrections suck, but humans thinking they're wise enough to intervene in a way that not only produces their intended outcome, but also does so without unwanted side effects are far worse.
*Viruses* suck, but humans thinking they're wise enough to intervene in a way that not only produces their intended outcome, but also does so without unwanted side effects are far worse.
(Let the virus play out...)
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*Viruses* suck, but humans thinking they're wise enough to intervene in a way that not only produces their intended outcome, but also does so without unwanted side effects are far worse. (Let the virus play out...)
I realize you're trying to make a point, but look at how humans have essentially created antibiotic resistant bacteria and a fear that they could wipe out much of the population under the right conditions. I think this shows why your analogy doesn't look as good even ignoring the other problems with it.
Comparing two complex systems is fine, but you're ignoring that one is a biological system where microorganisms behave in a particular way and the other is a system formed of rational actors that attempt t
Re:This is what made America great (Score:5, Insightful)
When the economy suffers, the rich may see their portfolios shrink, but it's the poor who lose their homes.
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Yes and no (Score:2)
If we still had strong worker protections and Unions yeah, but we gave those up. It's not clear what we got in exchange, but now everytime the markets take a hit there's a round of stock buybacks funded by layoffs and longer hours with increased productivity.
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So, you're saying people shouldn't take advantage of an opportunity when it presents itself?
You know...many of the "rich" got that way, by looking for and seeing opportunities where others didn't and acting upon them.
And, not everyone flipping properties is rich...many save and start with one, and build their portfolio with one.
Real estate will always have opportunities.....always has, always w
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You can't make any tests, deliver them, or administer them without economic activity. "The economy" is what people do.
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So you're saying the tests wouldn't be possible without the Fed lowering rates?
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Not necessarily, but also, possibly. A short term rate cut can allow businesses to borrow money to tide them over in an emergency. Usually that's most applicable to banks, but banks going bust trickles down and affects everyone. Remember last time?
The point is that a functioning economy is what enables all our modern conveniences, including disaster response. Without it, we're just a bunch of monkeys running around trying our best to fend for ourselves. The reason the US sent medical aid to Sierra Leone dur
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Unlikely to be a problem exclusive to America.
I'm pretty sure the potential economic impact factored into China's early decisions to try and keep things quiet.
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Same with the ridiculous over-reaction (50 million quarantined?)
They had to worry about being shut off from exports, which, in the larger trade war context, is punishment lying on the ground waiting to be picked up by other countries.
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The economy suffering leads to businesses closing. People who lose their jobs also lose their health insurance, etc.. The economy shouldn't be the highest priority, but it's still important.
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A virus with a 2% death rate is not capable of becoming pandemic.
And I rather doubt even a 0% interest rate can protect the economic from a pandemic- and one will come, eventually.
Re:This is what made America great (Score:4, Informative)
A virus with a 2% death rate is not capable of becoming pandemic.
And I rather doubt even a 0% interest rate can protect the economic from a pandemic- and one will come, eventually.
Whether or not an infectious disease can become pandemic has nothing to do with its death rate, and everything to do with its level of infectiousness. As far as the interest rate is concerned, I think that's more about mitigation than prevention.
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Well, trying to keep both as healthy as possible are not mutually exclusive events and activities.
If the economy goes tits up....we're likely having much MORE devastation to the US than this virus which while deadly, isn't appearing to be THAN deadly.
Let the economy falter, and all of a sudden, medicines, food, stops bein
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this virus which while deadly, isn't appearing to be THAN deadly.
so far, the death rate is 6% or so. If this is very infectious (which it seems to be), then it *could* kill ~20m in the US alone...
It won't do that here... We've lost 10,000 to the flu this year already, This won't be all that bad considering and it certainly won't kill 20 Million. We might see 20,000 deaths, but I seriously doubt it gets that bad.
Will it kill *some*? Yes. Will a lot of folks get sick? Yes... Is it the end of the economic world? No, not likely. This will be a short term economic speed bump and will be mostly past us in about 3-4 months, then the economy will recover nicely.
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6%? Liar.
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More like all the corrupt figures on Wall Street see an opportunity with the Corona virus scare to do a stock market dump and give an excuse for the feds to reduce rates (which makes them more money and fucks everyone else in the country).
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You don't have to be corrupt to see that with China nearly shutting down, and with the rest of the worlds companies and economies tied to it.....that you might want to sell off some of your holdings that have been making a lot of $$ this past decade + and bank some of the profits you've made.
There's a lot of folks with 401K's...that I'll bet those filks hope their accounts have manage
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Hey, they are just making sure the coronavirus has the same access to capital as everyone else!
Keynsians (Score:5, Funny)
Re:Keynsians (Score:5, Funny)
Like trying to do eye surgery for everyone in a city using nothing but a bulldozer while getting in a fistfight with other operators on how to start the engine of the bulldozer.
Oh, this is much more desperate. This is like trying to stop a viral pandemic by manipulating the securities industry. But if it gets you re-elected, then why not, eh?
Personally, I think we'd be better off attaching leeches to bankers.
Value, value, who's got the value (Score:2)
I wish I could add an insightful mod, especially about the leeches.
My question is about where the "value" is supposed to be. I have two primary theories:
(1) Circular trading among computers. The same shares circulate among computers A, B, C... with the prices rising in each round. No value created anywhere, but apparently YUGE profits that easily pay for the interest as more and more money is borrowed to keep inflating the bubble.
(2) Corporate stock buybacks, the ultimate form of insider trading. Who knows
Re:Keynsians (Score:5, Insightful)
I don't see how your analogy fits. Furthermore, you don't make it clear what economic theory you favor as opposed to Keynes'. It was Keynesian economics that helped the world survive the Great Depression, just as it was Keynesian economics that prevented the Great Recession from becoming a depression.
The only problem with Keynesian economics is that politicians only adhere to Keynesian principles to fix things when they break rather than to prevent them from breaking. We've been long overdue for tax increases and increased interest rates but instead we cut taxes and pushed interest rates as low as possible. Because constituents for the most part don't understand how economics works, no one is willing to tolerate politicians tightening the belt when things are doing well. Recessions are always preceded by an excess of confidence and politicians acting like this one time, unlike any other time, expansion will continue indefinitely.
Please, point out some non-Keynesian system that has worked to maintain economic stability and has corrected economic downturns. It's never happened. Supply-side policies create the messes that Keynesian policies clean up.
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The 1% can only spend so much. A dollar in the hands of bill gates sits in a virtual money bin. A dollar in the hands of most /.ers gets spent.
Do you think the wealthy sit on their finances like a dragon atop a pile of gold? The 1% invest their wealth, which is also what more and more blue collar workers are doing as well. The dirty secret (okay it really isn't dirty or even a secret, but that doesn't sound as scintillating) of why the wealthy keep getting wealthier is because they can afford better financial management.
No one is not spending money. The only difference is where it's being spent. You'll have to explain why a dollar spent on a be
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I still think Slashdot needs an edit button.
Helllllll no. Do. Not. Want.
I don't want people playing games with what they've already put out there. It's like censorship. You'll get the bad with the good.
I mean, I'd love an edit button, but not at that price.
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But Slashdot would? Why?
Because they still haven't figured how to give us a rich text editor. We still have to write HTML to get any formatting.
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I still think Slashdot needs an edit button. It hasn't harmed any site with one, and it'll make it a lot easier to prevent people focusing on irrelevant mistakes than on actual substantive discussion.
Or you might "prevent" errors by resisting an impulse to finish with minimal consideration because that's what a Preview button is: An editing procedure. Many writers prescribe staggering proofreads by briefly focusing attention to a wholly different kind of task, or just another composition, for only a minute or so.
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I took a look at the symptoms for Coronavirus and I didn't see diarrhea as one of them. Have people gone insane?
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If you're afraid to go to the grocery store because oh crap the infected are everywhere, you need supplies. As humans, our attention immediately turns to "what am I going to put in my mouth?" and "how am I going to wipe my butt?"
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Do most people NOT keep a stocked pantry and freezer anymore?
When you're only tools a hammer (Score:2, Informative)
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This is a non-solution, as the representatives of the financial oligarchy will always vote themselves and their interest out with public funds. The government isn't yours, it's theirs; you have no influence on what the government's doing, they have. You can't tell Wall St. what to do - it tells you.
Here's a longer version of the argument: https://www.cambridge.org/core... [cambridge.org]
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When letting the big guys fail hurts the little guys more, it's not so simple.
You can't (Score:2)
We really did let them get too big to fail. They're holding our entire economy hostage.
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" the way Liz Warren or even Sanders suggests "
If the election plays out in their favor, they're going to learn that it takes more than just one person to make good on those promises.
When Congress just laughs at them, they'll figure it out soon enough.
Both already know that (Score:2)
As president Sanders has a _lot_ of power in the party. Not just theoretical, he can more or less put his people in charge and remake it how he sees fit. That's why they're freaking out. They're liable to lose their cushy fake jobs.
Re: Keynsians (Score:2)
Disappointing (Score:5, Insightful)
Left alone, the market(s) will recover on their own. Investors, and/or the Administration, couldn't tough it out for a few days or so -- seriously? (I say this as someone with investments who saw his net worth drop 6.5% in the last week of February.) Is a temporary dip (putting it mildly) in the Dow, NASDAQ and S&P really that overwhelmingly worrisome, especially as one of the causes seems to be a global (almost) pandemic killing thousands of people. Show some backbone Wall Street.
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My net worth dropped about 20% last week. Yesterday about half of the drop recovered. Was not stressed about the market.
But, an emergency short term rate cut might actually be avoid idea to help industries that could/will have existential impacts in the short term. But, doing so is obviously fraught with significant risks.
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As you allude, retail is not impacted in a major way, which is why the rate cut would not help them. Many tourism related industries will see an unrecoverable loss though. Others may do well to invest to diversify their supply chain more. These industries could benefit from the rate reduction.
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It will correct itself.
At some point the Fed will raise the rate back up and the markets will re-adjust to it like they always do.
This is a political play (Score:2)
The economy is living off folks feelings right now, much more than usual. That means it wouldn't take much more than a stiff wind to crash it, and if tha
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"The current administration will live or die by how people perceive the economy."
Not any more. People aren't going to blame Trump for the Wuhan virus disrupting Chinese supply lines and crashing the markets. At least normal people won't blame him. This was entirely predictable almost two months ago when China began quarantining tens of millions of people. It was also obvious that it would spread here and cause economic slowdown. If anything this was a huge gift for Trump. A market correction that he's
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" ALL ADMINISTRATIONS will live or die by how people perceive the economy. "
I fixed that for you :P
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Don't use that lame excuse. It's good practice and nothing to do with the fact that the year is arbitrarily divisible by 3 with a remainder of 1.
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You're complaining that people are actually putting their money where their mouth is? That people with actual money on the line are acting on it?
If you're so contrary to the market, put your money where your mouth is, and buy a whole bunch of short term calls on the market. After all, it's just a few days, right?
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Decided? (Score:2)
"The coronavirus poses evolving risks to economic activity," the Fed said in a statement. "In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point."
FOMC decided or they gave in to pressure? Interesting timing
Trump asks Fed for ‘big cut’ after Australia slashes rates on coronavirus impact [cnbc.com]. Trump gets rate cut a few hours later.
But that 50 basis point cut wasn't enough. Trump wants more [cnbc.com].
Re:Decided? (Score:4, Funny)
Re:Decided? (Score:5, Informative)
Not true (Score:3)
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He can be removed by Congress for "good cause", and we've seen the Republican congress does whatever Trump says.
We don't have a Republican Congress, we have a Republican-controlled Senate and a Democrat-controlled House.
Regardless, the President himself can remove the Chairman of the Federal Reserve for "Good Cause" [forbes.com] - he doesn't need Congress' cooperation to do so. I suppose if he did so without actually having "good cause", Congress could stop him by impeaching and convicting him... but we already know the latter won't happen, no matter what he does.
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The chairman of the Federal Reserve can't be fired by the President.
They can actually. But it is governed by statute (which of course could also be ignored, with the paper tiger threat of impeachment as consequence) to be limited to "good cause"
The current chairman was also originally nominated for and appointed to the board of governors under Obama
Negative. You're thinking of Janet Yellen, who hasn't been President of the Fed since her term ended in 2018.
Jerome Powell was appointed by Trump.
He doesn't appear to be a trump "stooge", and in general had pretty solid beliefs on monetary policy.. But he does appear weak to criticism from Trump.
I've been watching intently to see
Is this really going to help? (Score:2)
Something tells me that those multi-national organizations like Airlines and Hotel chains that have a big exposure in Coronavirus infected regions like China are going to need a lot more than a 50 basis point rate cut to keep them out of economic trouble.
That said, I doubt that we're going to be seeing much inflation right now outside of things like emergency medical supplies.
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Not just multi-national organizations. Local businesses and service industry folks are going to be hit hard. How many people will be going to restauarants, the movies, stores or tourist spots in the next few months?
A Nation of Winners (Score:3)
https://www.imdb.com/title/tt2... [imdb.com]
Carver (Michael Shannon):What did you think it would mean working for me?
Nash (Andrew Garfield):I just thought
Carver: No, you didn’t. Nobody does. Because who in their right mind wouldn’t rather put someone in a home than drag them out of it? Up until three years ago, I was a regular old real-estate agent. Putting people in homes, speculating on properties, that was my job.
Now, in 2006, Robert and Juliet Tanner borrowed $30,000 to put an enclosed patio on their home that they had somehow managed to live without for 25 years. Why don’t you ask them about that when they’re spitting in your face while you’re walking them to the curb. Why don’t you ask the bank what the hell they were thinking giving these people an adjustable rate mortgage and then you can go to the government and ask them why they lifted every regulation and sat there like a retarded step-child. You, the Tanners, the banks, Washington, every other home owner and investor from here to China turned my life into evictions.
I’m not an aristocrat. I wasn’t born into this. My daddy was a roofer. Okay? I grew up on construction sites watching him bust his ass until he fell off a town house one day. A lifetime of insurance payments, and they dropped him, before he could buy a wheel-chair, but only after they got him hooked on pain killers. Now, do you think I’m going to let that happen to me? You think America 2010 gives a flying rat’s ass about us?
America doesn’t bail out the losers. America was built by bailing out the winners. By rigging a nation of the winners, for the winners, by the winners. You go to church? Only one in a hundred is going to get on that ark son. And every other poor soul is going to drown. I’m not going to drown.
Cut the interest rates (Score:4, Insightful)
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fixed income from CDs
Which, by definition, are fixed. So no. You don't have less income. You do however have an asset whose price just went up. Should you sell it, those money-grubbing bastards in DC will be more than happy to take their cut of your capital gains. Don't sell and you are OK. Until they find some way to impute the gains and bill you for tax on that amount..
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Wall Street steals more money from seniors than any tax man you rail against. Tax is the side show, part of the smoke and mirrors used by Wall Street to keep you distracted. Keep stealing from the people long enough, people will vote for socialism and nationalize wall street.
This makes absolutely no sense (Score:2)
The objectives as mandated by the Congress in the Federal Reserve Act are promoting (1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase. In this way, the Fed’s monetary policy decisions truly affect the financial lives of all Americans—not just the spending decisions we make as consumers, but also the spending decisions of businesses—about what they produce, how many workers they employ
Great conceren (Score:3)
Never in my years have I ever seen a president twice tell the Fed to lower the interest rate [cnbc.com], and the Fed actually did exactly that within a week of the request.
It's a dangerous time, that the executive branch has this much influence over monetary policy. Especially considering that head of our Executive Branch has had his hotels and casinos declare bankruptcy six times in his lifetime.
Re:Great conceren (Score:4, Insightful)
People see what they choose to see. Apparently you didn't see the Fed raise rates several times over the past year and a half while Trump whined about it.
The Fed is trying to do the best they can to manage the money supply, despite the attempts at interference from the guy with the bizarre tan. And frankly, past presidents and past congresses haven't exactly been blameless either. They may not have made public statements about the Fed itself, but they're the ones who allowed the banks free reign to do pretty much whatever they wanted - which caused the 2008 crash.
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The Fed is trying to do the best they can to manage the money supply, despite the attempts at interference from the guy with the bizarre tan
That's been my take on it as well.
I am beginning to worry about whether or not Powell has the stones to continue acting independently though. It's getting harder to tell.
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Never in my years have I ever seen a president twice tell the Fed to lower the interest rate [cnbc.com], and the Fed actually did exactly that within a week of the request.
I know. Somehow the president's request and the market aligning amidst a market drop that is affected by a fast developing pandemic means that we have a government conspiracy on our hands.
So rich people get more free money... (Score:5, Insightful)
Business as usual.
Absolutely. (Score:4, Informative)
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If all people have is $920 per month, home prices will drop to reflect this.
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This does nothing to fix the problem (Score:2)
And now you're out of ammo.
And tests.
Way to go.
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Out of Ammo? LOL
They own the printing press, they are NOT out of ammo unless they cannot find enough paper and ink. It's a process called Quantitative Easing and it's been in heavy use for more than a decade, allowing the government to buy it's own Bonds by printing money to pay for them. How do you think the Social Security Trust Fund stays solvent?
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His whole platform revolves around the economy doing well.
Well, the stock market anyway. I'm sure farmers would prefer to actually be selling more rather than getting government handouts and U.S. purchasers would prefer to not pay all the current tariffs (and, yes, *we* pay these, not China), etc... The market and interest rates are super important to him as a real-estate / market investor and debtor.
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Desperately trying anything that'll stick to Trump. It might've worked if you hadn't wasted the past three years crying wolf accusing him of everything else.
Ironically this COVID "crash" was a gift for Trump. The market was already in a historic bubble long overdue for a big correction and now there's a reason for it that normal people won't blame on Trump. It's happened far enough before the election that any recovery will be credited to him too.
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So what? So did Obama: https://www.nytimes.com/2008/1... [nytimes.com]
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At this point, there are more fiscal conservatives on the American left than on the American right.
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The federal funs rate is *not* free money. It's what you pay to USE the money you borrowed from the fed. You still have to pay that money back.
Where it does make more money flow, it doesn't really create or print money. That's quantitative easing, where the Fed buys it's own bonds with money it printed in Ft Worth, THAT is free money for the government to spend. But even that isn't free, if you have a dollar in your bank account, YOU are paying for quantitative easing because your saved dollar is dilute