Forget QE3, the Fed Might Have Something Better

With even unconventional Fed tools showing little fruitfulness, Fed watchers should take heed that Bernanke & Co. are evaluating a new program that can help breath life into the stagnant U.S. economy courtesy of our friends across the pond.

Last week, in a joint move, the Bank of England and the Treasury there surprised markets with a ‘funding-for-lending’ program. While little details are available, the program will provide funding to banks over several years at rates below current market rates. Money can be lent against “the widest range of collateral.” The program is expected to be structured to ensure that the banks then pass the lower costs to customers and boost the overall economy.

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