If you were wondering why housing prices are going up again while it’s clear we’re still in a recession, this may have something to do with it. According to Reuters, the Federal Reserve just bought $12.2 billion in mortgage-backed-securities (MBS) last week and didn’t sell any. If that doesn’t resonate with you, let’s break it down.
Fannie Mae and Freddie Mac purchase mortgages and package them as securities. Due to federal policy, these are sometimes unwise mortgages and have high risk of default. They buy them anyway because there’s a buyer—the Federal Reserve. But the Federal Reserve isn’t selling because no one else wants these MBSs because, after what we saw in 2008, it’s clear that these are bad investments and tend to lead the worldwide economy into free fall when prices go down.
Well, the Fed must know what it’s doing in order to risk so much money, right? Well, not really. Since the Fed doesn’t really have any wealth, it doesn’t have anything to lose. It just prints money out of thin air and gives it to the corrupt government-sponsored-enterprises Fannie and Freddie. They are inflating the currency to nothing in order to prop up a limp housing market.
WARNING! YOU ARE ENTERING A LOGIC ZONE:
This is exactly what precipitated the housing crash of 2008 and the subsequent Great Recession that we’re still digging ourselves out of. But instead of financial companies on the hook for bad investments, the American taxpayer is directly on the hook. Einstein said that doing the same thing over and over again and expecting the same result is called CRAZY. Ben Bernanke just calls it the Fed’s monetary policy.
WHAT THE FED IS DOING IS CRAZY.
Notice Ben Bernanke is flipping you off in this meme. It’s representative of his behavior as Fed chair.