Posted: 9/13/2012 12:53:01 PM
Well boys, it is finally here. Today the Fed announced QE3.....which is basically the consolidation of mortgage backed securities, aka the deeds to your homes.
The feds are already the single largest owner of homes in the US (specifically the paper behind the loans on the homes), and this program will make them even larger.
It is difficult to truly understand what this will mean to our economy long term. From my perspective, it will not help the real estate market one bit. With such a large asset class being controlled by the feds, I am not sure how home values will ever gain substantially......just looks to me like the big boy on the block is buying up all of the hard assets for a fraction of what they were and are worth.
QE 3 is also a convenient way to help out the investment banks by getting some of those ugly sub-prime loans off of the books......it is a win/win for the big money.
In the end, it is my humble opinion that all of this shifting of debt loads and purchasing of mortgage backed securities is just paper magic geared towards propping up the economy in the short run. Long run, we are looking at inflation and static hard asset values.