In March of 2009 Ben Bernanke shocked the world when he announced he would be purchasing $1.25 trillion in mortgages through the remainder of the year.
In September he announced he would be pushing back the program through March of 2010, but he repeatedly promised that the program would end at that point as part of the Fed's "exit strategy."
As I have discussed repeatedly, the government and the Federal Reserve in combination have now become the mortgage market. They now purchase, guarantee, or insure 96% of all new mortgages being created. Without this artificial support the housing market would collapse and it was only a matter of time before Bernanke announced additional purchases.
This afternoon, when the Fed minutes were released, Bernanke showed his hand. The following was taken from the minutes directly:
"It might become desirable at some point in the future to provide more policy stimulus by expanding the planned scale of the Committee’s large-scale asset purchases and continuing them beyond the first quarter, especially if the outlook for economic growth were to weaken or if mortgage market functioning were to deteriorate."
There it is. Mortgage Purchase Program: Part II
Look for a similar announcement coming soon for treasury bond purchases.
Gold rocketed upward on the news, a small taste of what is to come.