The Fed, under the tutelage of Chairman Bernanke, will be conducting open market operations to put money into the banking system.
Washington Post offers a good explanation.
Fed announces new mortgage bond-buying plan, keeps interest rates low
The Fed’s steps were in many ways remarkable: For the first time, it made a definitive promise that it would keep interest rates ultra-low even if the economy starts to recover. That sent a clear signal that for years it will be cheap for consumers to borrow to buy homes and cars or for businesses to get loans to expand.
To reinforce the point, the Fed said it will buy $40 billion per month in mortgage bonds in addition to $45 billion in Treasury bonds through the end of the year, a process known as “quantitative easing.” After that, the Fed will reassess its actions, but it is likely to continue buying tens of billions of dollars of mortgage bonds unless the economy suddenly shows signs of a major rebound.
that's a lot of money creation. Is this a good idea? Well, it's the only idea. My opinion (and not just mine) - Bernanke viewed it as the only was to stave off a double dip recession.
The immediate results? Stocks rise in price (as they did Thursday, by about 2%) because investors know that some of that money will be going into financial instruments like stocks, and puff up their prices (regardless of underlying value or company earnings). And gold went up, because it also means inflation down the road. Maybe big-time inflation. Oil is around $100 a barrel now - commodity prices will rise (almost ceratinly).
Ultmate result - probably negligible as far as growing the economy and jobs. Until there's a change in fiscal policy (you know, federal budgets, deficits, stuff like that) there will be too much uncertainty in the business world. And we know where the blame lies ... Not with the Fed or Bernanke.
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