The US Federal Reserve is to embark on quantitative easing by buying up longer-term Treasuries for the first time as part of a $1.15 trillion (£808bn) spending spree with the aim of reviving the American economy out of recession.
We are going to fix it by printing up $1.15 trillion in play money.
In a development which mirrors recent actions by the Bank of England, America's central bank will buy $300bn of US government securities in an attempt to pump more funds into the economy by monetising its own debt.
The government is paying debts by printing money.
James Caron, Morgan Stanley's head of global rates research, said the decision was "a pretty dramatic move," while State Street's Robert Blake noted that it "reverses course from what Bernanke had suggested in January," adding the Treasury purchases are likely to be a one-off.
The powers that be were swearing that there would be no inflation because stimulus was being done with debt and not printing. Now this has reversed as we all knew it would.
It also pushed the dollar significantly lower, with the euro hitting a two-month peak above $1.3427 at one stage, and sterling rebounding 1.2pc to $1.4224.
The dollar fell significantly lower to other currencies because there are now $1.15 trillion more of them.
Expect many more sequels to this sad tale.
