Mikkel Rosenvold
1 week ago

Freddie Mac Proposes Unleashing Trillions to Stimulate US Consumption

As U.S. excess savings diminish, Freddie Mac's new proposal might unlock vast consumer potential—could this be the spark for the next economic boom?

In a striking revelation from Steno Research, macro expert Andreas Steno details an emerging strategy from Freddie Mac that could potentially inject trillions of dollars back into the U.S. economy. According to Steno, the pandemic's "excess savings pool" in the U.S. has effectively disappeared, setting the stage for strategic financial maneuvers.

Freddie Mac is considering a bold initiative to buy back closed-end single-family mortgages when it already owns the corresponding first-lien mortgage risk. "This could realistically unlock between $1.5 to $2 trillion in consumer spending, tapping into the nearly $11 trillion in excess equity from the U.S. housing market," Steno explains.

The proposal comes at a time when the U.S. housing market is experiencing a slowdown in activity due to homeowners reluctant to move or refinance because of rising interest rates, a phenomenon Steno refers to as the "golden hand-cuff" syndrome. "The available equity is substantial, but frozen under current conditions," he notes, suggesting that Freddie Mac's move could revitalize market dynamics significantly.

This strategic financial adjustment could not only stimulate substantial economic activity but also influence inflation rates. "Unleashing such a significant amount of spending power into the economy could have inflationary effects, especially given the current state of financial liquidity and growth trends," Steno adds.

Steno also contrasts these trends with European data, notably from Germany, where the excess savings situation appears less dire. This discrepancy underscores differing fiscal impacts and potential responses between the U.S. and Europe.

The proposal is still under review, with a public comment period ending soon, but its implications for both the housing market and broader U.S. economy are profound. As Steno concludes, "We're on the brink of potentially transformative economic policy that could redefine consumer spending patterns and economic growth in the near future."


The information provided by this Site is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.

More News

1 hour ago FX Daily: May 28, 2024 - Currency Movements Signal Mixed Trends Daily update from the foreign exchange market.
3 hours ago US Market Open: May 28, 2024 - Mixed Signals Amid Sector Divergence Daily update from the US market open.
3 hours ago The Western World’s Financial Leaders Met - Here are 7 Central Highlights Discover how the G7's latest meeting addressed global economic challenges, AI integration, and sustainable development.
8 hours ago Chocolate Trade Tiff: EU Fines Oreo and Toblerone Parent for Anticompetitive Practices EU slaps €337.5 million fine on Oreo and Toblerone maker for stifling trade.
8 hours ago Europe Market Open: May 28, 2024 - Mixed Performance Across European Markets Daily update from the European market open.
23 hours ago Dogecoin Dog Has Passed Away Farewell to Kabosu: The Shiba Inu behind the iconic ‘Doge’-meme and Dogecoin
1 day ago Israeli Airstrike Hits Rafah Tent Camp Israeli airstrike on Rafah camp kills dozens, raising international alarm.
1 day ago Meta and Call of Duty Maker Sued by Families of School Shooting Victims Families of the 2022 Uvalde school shooting victims file lawsuits against major corporations and officials, claiming they contributed to the tragedy.
1 day ago Walmart and Capital One Call It Quits on Partnership Walmart and Capital One announce the end of their six-year card partnership amidst legal disputes.