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Fed policy makers said yesterday they plan to buy up to $300 billion of U.S. government bonds and step up purchases of mortgage bonds, expanding the central bank’s balance sheet by as much as $1.15 trillion. The extra supply of dollars threatens to overwhelm investors just as the budget deficit swells.
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“Sell the dollar!”.... “This is huge, huge.... This is the last thing they have in the closet, and they used it a bit early.”
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“The Fed is basically financing our deficit by buying the debt issued by the Treasury,” she said. “If the Obama administration pushes through another stimulus package, the dollar is done.”
