Joe Weisenthal, deputy editor at Business Insider, and Ben White, Morning Money and economy reporter at Politico, assess the impact of the Federal Reserve’s newly announced plan to help the economy — called QE3 because it’s the third round of what’s known as “quantitative easing.” Reserve Chairman Ben Bernanke said the Fed will buy billions of dollars worth of bonds through the end of the year and promised to keep interest rates low indefinitely.
Spitzer asks how much QE3 will really impact the economy, since interest rates are already near zero. Weisenthal answers: “When you think about it in terms of the future commitment to keep rates low, then you start to look at, if you’re a bank, you’re approving mortgage loans, you’re approving auto loans, and you feel confident that you can lend out at this rate because rates are going to stay low in the future.”
And while some argue that Bernanke’s actions will lead to inflation, White explains why a little inflation might be a good thing for the economy. “It can cut down on people’s debts — if they’ve got more money, the debt that they accrued at a lower rate is actually easier to pay off now. … And it also forces people to use money now.”