RWCG


He’s a savvy one, he is
January 14, 2013, 11:38 pm
Filed under: Uncategorized

Bernanke: QE successfully brings down mortgage rates

Let me rephrase that more simply: “Bernanke: Buying alotta stuff drove up the price”

THANK GOODNESS FOR THESE WIZARDS OF HIGH FINANCE

Because look, QE = buying (mostly) mortgage bonds. Buying bonds drives up their price (at least if you’re as big as, oh, say, the Fed). High price for mortgage bond = more money being lent (after the fact) to homebuyers = lower mortgage rates.

So yes, it’s not surprising if QE ‘brings down mortgage rates’ anymore than it would be surprising if the Fed bought up tulips and then the price of tulips went up. The real question is, why should we want that.

Do we now think mortgages have been generally too hard to get in the past 10 years? Is that the Lesson Of The Crisis?

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1 Comment so far
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Seems like they want low mortgage rates + high house prices. I think high rates and low prices would be just as good, and much better at preventing risky behavior like borrowing. We established, though, that they are only vaguely aware that the crisis had any cause at all other than robber barons, some no doubt with mustaches and monocles, so there’s that. Intellectually, the left is still stuck somewhere in the 20s or 30s (as opposed to the right which is stuck in the 70s)

Comment by Matt




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