So the Fed announced QE3, which in a nutshell means unlimited money printing until it decides when to stop. It will buy mortgage-backed securities from the too-big-to-fail banks, you know, the ones that were part of the cause of the financial meltdown in 2008. By selling crappy assets to the Fed, the banks get fresh dollars that they can use to speculate in stocks (front-running their clients and inflate the stock bubble) and buy US government securities that will pay them interest courtesy of the US taxpayer.
The Fed argues that the banks will loan money to people, who in turn will start businesses, hire people, who in turn will buy houses and hire construction workers. In reality, the banks will not loan the money because anyone who wants to borrow money, can't.
The Fed also said it will extend its interest rate manipulation through 2015. So those wanting to refinance or borrow to buy houses from the housing market that hasn't bottomed in many geographies don't worry, you have a lot of time.
The S&P 500 rejoiced and went up 1.7% in a couple of hours.
Source: http://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-mortgage-securities-each-month.html
Source: http://online.barrons.com/article/current_yield.html
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