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What people think is going to happen to the economy has a huge influence over what actually happens. If you can change peoples' expectations, you can change the world.
The Federal Reserve knows this. And, as Robert Smith pointed out this morning, Ben Bernanke and the Fed have been using the power of expectations more and more in recent years.
This afternoon, the Fed took another huge step in this direction.
The Fed just released a policy statement that is a very big deal not so much because of the specific actions the Fed announced, but because of the language the Fed used, and the expectations that language will create.
The Fed announced a new plan to buy $40 billion of mortgage bonds every month. It's the third round of quantitative easing
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