Tuesday, October 7, 2008

Fed. Reserve to buy massive amounts of debt!

This morning the Federal Reserve announced that it was going to buy massive amounts of "credit clog debt" in order to try and save the nation's economy. The Fed. Reserve has the power during emergency times to buy commercial paper or money in other words in order to to make things more "stable." The buying of commercial paper is something that companies do on day to day operations like buying supplies and making payrolls. Before the economy fell around $100 billion of these IOU's were given out at any time. They were sold by large companies to buyers of mutual funds, pension funds, and a variety of other investors. Usually people only buy these papers or money overnight or for a couple of days. Investors are not sure weather they want to put their money any where right now until the economy is much more stable. Many companies are very vulnerable to this whole situation. The purpose of this plan is to provide the government a "bankstop" that would help companies find a new way to get cash. I hope evrything works out with our economy becuase evn before this people were already struggling. And even if this financial crisis comes through the money is not going to the people who need it the most. It will go to the most wealthy, and not anyone else.

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