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dpdoor (< 20)

Fed Muni Bonds



August 19, 2012 – Comments (0)

It seems that the next fed move would be to buy municipal bonds. The largest employer in many cities is the local government itself. Many cities are in drier straits and several have recently filed for bankruptcy protection. I am not very familiar with bonds but it seems that the interest payments on bonds is a stress on city and state governments. If the fed were to buy these bonds they could lower the interest rates on the bonds lowering the local governments expenses. The bonds are earmarked for projects, not for hiring civil servants or government employees, but lowering the interest rates lowers the expenses and gives more money to use elsewhere.

It is easy to say we need less government but we need more teachers not fewer. As a retail business owner I know 20% or more of my business is  from civil servants and city employees. A recession is the worst time for cutting jobs, the layoffs of teachers alone made a noticeable decline in sales of many business. Many business went under and most all had to also layoff their employees. The domino effect is what we have been feeling. The government lays off people they don’t buy our products, we loose business so we spend less, where you work may be one of the places that we spend less at; this affects you.

Getting health back to the cities is important to evreyone and could be the next focus of the fed.

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