Trump-style QE: Bypassing the Federal Reserve, directly using government-controlled financial giants (Fannie Mae and Freddie Mac, collectively known as GSEs) for targeted liquidity infusion.
Trump directed GSEs through an executive order to deploy $200 billion to purchase mortgage-backed securities (MBS), lowering mortgage rates and making home buying cheaper.
The Federal Reserve's dilemma: If inflation does not decrease, the Fed should maintain high interest rates. Trump's clever move: Forcibly lowering mortgage rates through administrative measures.
Consequences: An administrative approach leading to fiscal expansion and monetary tightening polarization. Mortgage rates drop, stimulating homebuying demand, which could actually push home prices higher (because supply hasn't kept up). But it may eventually evolve into a structural inflation, forcing the Fed to maintain high interest rates in other sectors.
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Trump-style QE: Bypassing the Federal Reserve, directly using government-controlled financial giants (Fannie Mae and Freddie Mac, collectively known as GSEs) for targeted liquidity infusion.
Trump directed GSEs through an executive order to deploy $200 billion to purchase mortgage-backed securities (MBS), lowering mortgage rates and making home buying cheaper.
The Federal Reserve's dilemma: If inflation does not decrease, the Fed should maintain high interest rates.
Trump's clever move: Forcibly lowering mortgage rates through administrative measures.
Consequences: An administrative approach leading to fiscal expansion and monetary tightening polarization. Mortgage rates drop, stimulating homebuying demand, which could actually push home prices higher (because supply hasn't kept up). But it may eventually evolve into a structural inflation, forcing the Fed to maintain high interest rates in other sectors.