What is QE3 and what does it do?
On September 13th 2012, the Federal Reserve announced another stimulus package to help the economy by printing more dollars & plans to buy mortgage-backed securities. By doing this, they are asking the banks to give more credit and lend more to consumers. In the past, more credit equaled more spending. Historically, when people spent more, it meant the economy and markets are "strong". And when the economy and market are "strong", people will invest! Unfortunately, the more dollars the Federal Reserve prints, the less valuable the dollar will be.
Upon the news by Ben Bernanke, the stock market rallied and some analysts were actually happy about this! Gold & silver rallied as well! Investors are looking for a strong or secure investment, therefore a rise in the metals is what we are seeing now.
Check out this video that was done 3 months ago. It gives a quick and easy explanation of QE3 and why it may not be what you think it should be...
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