what is quantitative easing

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What Is Quantitative Easing?

Business Insider | Nov. 2, 2010, 1:49 PM | 8,916 | 14

A quick refresher from Wikipedia, in case you're not quite sure but don't want to sound dumb

by asking... We published this originally back in August.

Quantitative Easing

The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of

money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to,

zero.

A central bank does this by first crediting its own account with money it has created ex nihilo ("out of nothing"). It then

purchases financial assets, including government bonds and corporate bonds, from banks and other financial institutions

in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess

reserves required for them to create new money by the process of deposit multiplication from increased lending in the

fractional reserve banking system. The increase in the money supply thus stimulates the economy. Risks include the

policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt

simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their

present loan portfolio.

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the

pressure on banks. However, another explanation is that the name comes from the Japanese-language expression for

"stimulatory monetary policy", which uses the term "easing". Quantitative easing is sometimes colloquially described as

"printing money" although in reality the money is simply created by electronically adding a number to an account.

Examples of economies where this policy has been used include Japan during the early 2000s, and the United States

and United Kingdom during the global financial crisis of 2008–2009.

[edit] Concept

Ordinarily, the central bank uses its control of interest rates, or sometimes reserve requirements, to indirectly

influence the supply of money. In some situations, such as very low inflation or deflation, setting a low interest rate is

not enough to maintain an adequate money supply, and so quantitative easing is employed to further boost the amount of

money in the financial system. This is often considered a "last resort" to increase the money supply. The first step is

for the bank to create more money ex nihilo ("out of nothing") by crediting its own account. It can then use these funds to

buy investments like government bonds from financial firms such as banks, insurance companies and pension funds, in

a process known as "monetising the debt".

For example, in introducing its QE programme, the Bank of England bought gilts from financial institutions, along with a

smaller amount of high-quality debt issued by private companies. The banks, insurance companies and pension funds

can then use the money they have received for lending or even buying back more bonds from the bank. The central bank

can also lend the new money to private banks or buy assets from banks in exchange for currency. These have

the effect of depressing interest yields on government bonds and similar investments, making it cheaper for business to

raise capital. Another positive side effect of this is that investors will swap to other investments, such as shares,

boosting the price of these and increasing wealth in the economy. QE can also help in reducing interbank overnight

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What Is Quantitative Easing? http://www.businessinsider.com/what-is-quantitative-easing

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interest rates, and thereby encourage banks to loan money to higher interest-paying bodies.

More specifically, in terms of the lending undertaken by commercial banks, they use a practice called fractional-reserve

banking whereby they abide by a reserve requirement, which regulates them to keep a percentage of deposits in

"reserve", which can only be used to settle transactions between them and the central bank. The remainder,

called "excess reserves", can (but does not have to be) be used as a basis for lending. When, under QE, a central bank

buys from an institution, the institution's bank account is credited directly and their bank gains reserves. The increase in

deposits from the quantitative easing process causes an excess in reserves and private banks can then, if they wish,

create even more new money out of "thin air" by increasing debt (lending) through a process known as deposit

multiplication and thus increase the country's money supply. The reserve requirement limits the amount of new money.

For example a 10% reserve requirement means that for every $10,000 created by quantitative easing the total new

money created is potentially $100,000. The US Federal Reserve's now out-of-print booklet Modern Money Mechanics

explains the process.

A state must be in control of its own currency and monetary policy if it is to be able to unilaterally employ quantitative

easing. Countries in the eurozone (for example) cannot unilaterally use this policy tool, but must rely on the European

Central Bank to implement it. There may also be other policy considerations. For example, under Article 123 of

the Treaty on the Functioning of the European Union and later Maastricht Treaty, EU member states are not allowed to

finance their public deficits (debts) by simply printing the money required to fill the hole, as happened in Weimar

Germany and more recently in Zimbabwe. Banks using QE, such as the Bank of England, have argued that they are

increasing the supply of money not to fund government debt but to prevent deflation, and will choose the financial

products they buy accordingly, for example, by buying government bonds not straight from the government, but in

secondary markets.

[edit] History

Quantitative easing was used unsuccessfully by the Bank of Japan (BOJ) to fight domestic deflation in the early

2000s. During the global financial crisis of 2008, policies announced by the US Federal Reserve under Ben Bernanke to

counter the effects of the crisis are a form of quantitative easing. Its balance sheet expanded dramatically by adding new

assets and new liabilities without "sterilizing" these by corresponding subtractions. In the same period the United

Kingdom used quantitative easing as an additional arm of its monetary policy in order to alleviate its financial crisis.

The European Central Bank (ECB) has used 12-month long-term refinancing operations (a form of quantitative easing

without referring to it as such) through a process of expanding the assets that banks can use as collateral that can be

posted to the ECB in return for Euros. This process has led to bonds being "structured for the ECB" . By comparison

the other central banks were very restrictive in terms of the collateral they accept: the US Federal Reserve used to

accept primarily treasuries (in the first half of 2009 it bought almost any relatively safe dollar-denominated securities); the

Bank of England applied a large haircut.

In Japan's case, the BOJ had been maintaining short-term interest rates at close to their minimum attainable zero values

since 1999. With quantitative easing, it flooded commercial banks with excess liquidity to promote private lending,

leaving them with large stocks of excess reserves, and therefore little risk of a liquidity shortage. The BOJ

accomplished this by buying more government bonds than would be required to set the interest rate to zero. It also

bought asset-backed securities and equities, and extended the terms of its commercial paper purchasing operation.

[edit] How

The national bank declares an extremely low rate of interest, for example 0.5%.1.

The national bank credits its own bank account with money created from 'thin air' through lending interests.2.

The newly created money is then used for buying government bonds from financial firms such as banks, insurance companies and pension funds.3.

[edit] Risks

Quantitative easing is seen as a risky strategy that could trigger higher inflation than desired or even hyperinflation if it is

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improperly used and too much money is created.

Some economists argue that there is less risk of such an outcome when a central bank employs quantitative easing

strictly to ease credit markets (e.g. by buying commercial paper), whereas hyperinflation is more likely to be triggered

when money is created for the purpose of buying up government debts (i.e. treasury securities) which in turn can create

a political temptation for governments and legislatures to habitually spend more than their revenues without either raising

taxes or risking default on financial obligations.

Quantitative easing runs the risk of going too far. An increase in money supply to a system has an inflationary effect by

diluting the value of a unit of currency. People who have saved money will find it is devalued by inflation; this combined

with the associated low interest rates will put people who rely on their savings in difficulty. If devaluation of a currency is

seen externally to the country it can affect the international credit rating of the country which in turn can lower the

likelihood of foreign investment. Like old-fashioned money printing, Zimbabwe suffered an extreme case of a process that

has the same risks as quantitative easing, printing money, making its currency virtually worthless.

[edit] OriginThis section needs additional citations for verification.

Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (July 2010)

The original Japanese expression for "quantitative easing" (量的金融緩和, ryōteki kin'yū kanwa), was used for the firsttime by a Central Bank in the Bank of Japan’s publications. The Bank of Japan has claimed that the central bank

adopted a policy with this name on 19 March 2001. However, the Bank of Japan's official monetary policy

announcement of this date does not make any use of this expression (or any phrase using "quantitative") in either the

Japanese original statement or its English translation. Indeed, the Bank of Japan had for years, and in an article

published in February 2001 had claimed that "quantitative easing … is not effective" and rejected its use for monetary

policy. Speeches by the Bank of Japan leadership in 2001 gradually, and ex post, hardened the subsequent official

Bank of Japan stance that the policy adopted by the Bank of Japan on March 19, 2001 was in fact quantitative easing.

This became the established official view, especially after Toshihiko Fukui was appointed governor in February 2003. The

use by the Bank of Japan is not the origin of the term "quantitative easing" or its Japanese original (ryoteki kinyu kanwa).

This expression had been used since the mid-1990s by critics of the Bank of Japan and its monetary policy.

The earliest written record of the phrase and concept of "quantitative easing" has been attributed to the economist Dr

Richard Werner, Professor of International Banking at the School of Management, University of Southampton (UK). At

the time working as chief economist of Jardine Fleming Securities (Asia) Ltd in Tokyo, and noted for his 1991 warning of

the coming collapse of the Japanese banking system and economy (reference: Richard A. Werner, 1991, The Great Yen

Illusion: Japanese foreign investment and the role of land related credit creation, Oxford Institute of Economics and

Statistics Discussion Paper Series no. 129), he coined the expression in an article published on September 2, 1995 in

the Nihon Keizai Shinbun (Nikkei).

According to its author, he used this phrase in order to propose a new form of monetary stimulation policy by the central

bank that relied neither on interest rate reductions (which Werner claimed in his Nikkei article would be ineffective) nor on

the conventional monetarist policy prescription of expanding the money supply (e.g. through "printing money", expanding

high powered money, expanding bank reserves or boosting deposit aggregates such as M2+CD—all of which Werner

also claimed would be ineffective). Instead, Werner argued, it was necessary and sufficient for an economic recovery to

boost ‘credit creation’, through a number of measures. He estimated in this article that the incipient bad debt problem of

the Japanese system (i.e. including future bad debts) amounted to about ¥100 trillion, or 20% of annual Japanese GDP,

and that this had increased banks’ risk aversion. The subsequent slowdown in bank credit extension was the major

problem, because commercial banks are the main producers of the money supply, through the process of credit creation.

He thus recommended as a solution policies such as direct purchases of non-performing assets from the banks by the

central bank, direct lending to companies and the government by the central bank, purchases of commercial paper (CP)

and other debt, as well as equity instruments from companies by the central bank, as well as stopping the issuance of

government bonds to fund the public sector borrowing requirement and instead having the government borrow directly

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from banks through a standard loan contract. All of these, Werner claimed, would stimulate credit creation and hence

boost the economy. Many of these policies have recently been adopted by the US Federal Reserve under Chairman

Bernanke, who was familiar with the debate on Japanese monetary policy, under the expression of "credit easing".

However, while Werner used and explained the concept of credit creation in his article, he chose not to use it in the

article’s title, as too few readers would be familiar with it and alternative expressions were associated with flawed or failed

policy prescriptions. Werner preferred to coin a new phrase. In his subsequent writings, including his bestselling book on

the Bank of Japan (Princes of the Yen, M. E. Sharpe, and his 2005 book New Paradigm in Macroeconomics: Solving the

Riddle of Japanese Macroeconomic Performance, Palgrave Macmillan), Werner argues that the Bank of Japan’s usage

of his expression ‘quantitative easing’ may be misunderstood. While suggesting it was adopting the policy suggested by

a leading critic, the Bank of Japan implemented the standard monetarist expansion of bank reserves and high powered

money, which Werner had predicted would fail. It is not obvious why the Bank of Japan chose to use Mr Werner’s

expression, and not the already existing and widely used expressions ‘expansion of high powered money’, ‘expansion of

bank reserves’ or, simply, ‘money supply expansion’, which more accurately describe its adopted policy at the time.

[edit] Comparison with other instruments

[edit] Qualitative easing

Willem Buiter has proposed a terminology to distinguish quantitative easing, or an expansion of a central bank's balance

sheet, from what he terms qualitative easing, or the process of a central bank adding riskier assets onto its balance

sheet:Quantitative easing is an increase in the size of the balance sheet of the central bank through an increase it is [sic] monetary liabilities (base money), holding constant

the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total

value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an

increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio.

Qualitative easing is a shift in the composition of the assets of the central bank towards less liquid and riskier assets,

holding constant the size of the balance sheet (and the official policy rate and the rest of the list of usual suspects). The

less liquid and more risky assets can be private securities as well as sovereign or sovereign-guaranteed instruments. All

forms of risk, including credit risk (default risk) are included.

[edit] Credit easing

In introducing the Federal Reserve's response to the 2008-9 financial crisis, Fed Chairman Ben Bernanke was keen to

distance the new programme, which he termed "credit easing" from Japanese-style quantitative easing.In his speech, he

announced:

“Our approach—which could be described as "credit easing"—resembles quantitative easing in one respect: It involves an expansion of the central

bank's balance sheet. However, in a pure QE regime, the focus of policy is the quantity of bank reserves, which are liabilities of the central bank; the

composition of loans and securities on the asset side of the central bank's balance sheet is incidental. Indeed, although the Bank of Japan's policy

approach during the QE period was quite multifaceted, the overall stance of its policy was gauged primarily in terms of its target for bank reserves. In

contrast, the Federal Reserve's credit easing approach focuses on the mix of loans and securities that it holds and on how this composition of assets

affects credit conditions for households and businesses. ”

[edit] See also

Fiat currency

Debasement

Economic history of Japan

Economy of Japan

Open market operations

Money supply

Money creation

Inflation hedge

List of economics topics

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List of finance topics

ZIRP

[edit] References

"Q&A: Quantitative easing". BBC. 9 March 2009. http://news.bbc.co.uk/1/hi/business/7924506.stm. Retrieved 29 March 2009.1.

^ Elliott, Larry (8 January 2009). "Guardian Business Glossary: Quantitative Easing". London: The Guardian. http://www.guardian.co.uk/business/2008/oct

/14/businessglossary. Retrieved 19 January 2009.

2.

^ Voutsinas, Konstantinos, and Richard A. Werner, "New Evidence on the Effectiveness of ‘Quantitative Easing’ in Japan", Centre for Banking, Finance and

Sustainable Development, School of Management, University of Southampton.

3.

^ "Quantitative easing: A therapy of last resort". The New York Times. 1 January 2009. http://www.nytimes.com/2009/01/11/business/worldbusiness/11iht-

views12.1.19248009.html. Retrieved 12 July 2010.

4.

^ Stewart, Heather (29 January 2009). "Quantitative easing: last resort to get credit moving again". The Guardian. http://www.guardian.co.uk/business/2009/jan

/29/question-and-answer-quantitative-easing. Retrieved 12 July 2010.

5.

"Quantitative Easing explained". Bank of England. pp. 7-9. http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf. Retrieved 20 July 2010.

"(page 7) Bank buys assets from ... institutions ... credits the seller’s bank account. So the seller has more money in their bank account, while their bank holds a

corresponding claim against the Bank of England (known as reserves ... (page 8) high-quality debt ... (page 9) ... such as shares or company bonds. That will

push up the prices of those assets,"

6.

Bean, Charles (July 2009). "Ask the Deputy Governor". Bank of England. http://www.bankofengland.co.uk/monetarypolicy/qe/askqa.htm. Retrieved 12 July

2010.

7.

^ http://news.bbc.co.uk/1/hi/8517760.stm8.

^ Mark Spiegel. "FRBSF: Economic Letter - Quantitative Easing by the Bank of Japan (11/02/2001)". Federal Reserve Bank of San Francisco.

http://www.frbsf.org/publications/economics/letter/2001/el2001-31.html. Retrieved 2009-01-19.

9.

^ Alloway, Tracy, The Unthinkable Has Happened, ft.com, 10 November 2008. Retrieved 9 August 2010.10.

^ ‘Bernanke-san’ Signals Policy Shift, Evoking Japan Comparison, Bloomberg.com, 2 December 200811.

^ Bank pumps £75bn into economy, ft.com, 5 March 200912.

^ Evans, Rachel, Unsellable bonds structured to abuse ECB scheme, IFLR, 2 February 200913.

^ Easing Out of the Bank of Japan's Monetary Easing Policy (2004-33, 19 November 2004)14.

^ PIMCO/Tomoya Masanao interview15.

^ Shirakawa, Masaaki, "One Year Under ‘Quantitative Easing’", Institute for Monetary and Economic Studies, Bank of Japan, 2002.16.

^ Bank of Japan, New Procedures for Money Market Operations and Monetary Easing, 19 March 2001. Retrieved 9 August 2010.17.

^ Hiroshi Fujiki et. al., Monetary Policy under Zero Interest Rate: Viewpoints of Central Bank Economists, Monetary and Economic Studies, February 2001, p.98.

Accessed 9 August 2010.

18.

^ Richard Werner, Keizai Kyoshitsu: Keiki kaifuku, ryoteiki kinyu kanwa kara, Nikkei, 2 September 1995.19.

^ Willem Buiter (2008-12-09). ""Quantitative easing and qualitative easing: a terminological and taxonomic proposal"". http://blogs.ft.com/maverecon/2008/12

/quantitative-easing-and-qualitative-easing-a-terminological-and-taxonomic-proposal/. Retrieved 2009-02-02.

20.

^ Credit Easing versus Quantitative Easing21.

[edit] External links

Look up quantitative easing in Wiktionary, the free dictionary.

Stimulus Watch Tracking all measures taken by the Federal Reserve and other government agencies to address the financial and economic crisis

Deflation: Making Sure "It" Doesn't Happen Here, 2002 speech by Ben Bernanke on deflation and the utility of quantitative easing

Modern Money Mechanics Federal Reserve Document Explaining How Money Is Created

Quantitative easing explained (Financial Times Europe)

A Fed Governor Discusses Quantitative Easing Among Other Topics

Quantitative Easing Explained Pamphlet Putting More Money Into Our Economy To Boost Spending

Retrieved from "http://en.wikipedia.org/wiki/Quantitative_easing"

This page was last modified on 9 August 2010 at 05:29.

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Flag as Offensive

Sandy on Nov 2, 2:00 PM said:

Why can't we all print money to increase our Bank accounts? It's all backed by nothing...........

Flag as Offensive

aaron on Nov 2, 4:34 PM said:

@Sandy: Wow, wiki cut and paste. That's fine journalism they have here.

Flag as Offensive

halroper on Nov 2, 2:11 PM said:

Is there a counterpoint to ex nihilo like in deep s---?

Only kidding, I don't know what the hell to do either. Why not just admit that and start a barter trade again?Anyone got a couple of loose shells in their pocket?

Flag as Offensive

MauiMike on Nov 2, 3:40 PM said:

@halroper: No shells, but I do have silver and gold bullion. Oh, right. That's not REAL money!

Fidel C on Nov 2, 3:35 PM said:


6 of 8 9/26/2011 5:14 PM

Flag as Offensiveqe is the marxist second favorite way to spread the wealth.

the first is income taxation.

Flag as Offensive

bystander on Nov 2, 11:33 PM said:

@Fidel C: Um wrong. Ben Bernanke is going to drop money from helicopters. But you must own a bank to stand under the helicopterwhen the money is dropped.

Flag as Offensive

Translation Please! Mr. Or! on Nov 2, 3:47 PM said:

CORRECTION:

Quantitative easing (QE) is a monetary policy used by central banks to increase the wealth of banks on the assumption that a wealthy bank is an easier touchwhen credit-unworthy consumers/businesses come a-knocking for questionable loans. This desperate but generally futile sleight-of-hand, or slit-of-throat, by thecentral banks is accomplished by the central banks buying shit assets from the banks at outrageous prices. This policy is the nuke option when the central banks

cannot get the stubborn banks to loan money even when that money is lent to them by the central banks at near or zero interest rates. A central bank accomplishesthis outrage by first pretending it has more money than it has. It then purchases from the banks financial assets priced like the only whore when the Navy comes

ashore. This is a process referred to as open market operations, or larceny. The purchases give banks the wealth required for them to create new money by theprocess of deposit multiplication from increased lending in the fractional reserve banking system. (No one actually knows what the last sentence means, but it is

part of the QE process to pretend to know what this means).The increase in the money supply stimulates the economy if it doesn't kill it first. Risks include thepolicy being more effective than intended, spurring hyperinflation, the installation of a murderous dictatorship, the establishment of concentration camps, and theonset of two-front world war, or the risk of not being effective enough, if banks opt simply pocket the additional cash to pay higher bonuses and to upgrade to a

sluttier class of little dumplings on the side.

Flag as Offensive

TED NUGENT on Nov 2, 4:22 PM said:

WHAT IS QE?

RAPE SAVERS

REWARD RAPISTS

Flag as Offensive

Anonymous Comment on Nov 2, 6:32 PM said:

The problem with QE is that the original concept was conceived before [wink*wink*] the 'powers that be' [aka in this case - led by HelicopterBen] were aware of the rampant fraud in the system they were trying to save.

Surely this new understanding [brought forward ala foreclosure-gate] broadens the awareness of why the earlier QE did not work. Even the top of the food chainknows that the system has run its crooked course and are awaiting what more opportunities will arise out of QE. QE is about giving the institutions who brought this

crisis upon us a chance to figure out/fix the problem. However, they never conceived of a scenario in which their calamitous antics would NOT get bailed out. Itnever mattered how bad they mess up - in their minds the solution was always meant to come in the form of creative QE. Therefore, real solutions in which their

arses are on the line do not cross their mind. All they can think is "QE! QE! Now, mommy, please, we're thirsty."

Surely now that Bernanke [et al.] know the depravity of the minds that he is dealing with, he would not put it past them to starve half the world to get the upper

hand on this thing called money. In such a case, it is wise not to give them more, until they have shown they understand the meaning and values of a functioninglegal system as well as food security as a concept in their greedy litttle brains... and what it's like to go a day without food would do them some good... I think it's

one of those forty days and forty nights moments.

They need to take this paradigm-shift moment and create a new approach. The old one - made with limited understanding - is not ideal. New information of thismagnitude [system-wide fraud] must be brought to bear on the situation. None of this is isolated. We all see [those of us looking] the connection, but perhaps theexpectations have allowed some to misinterpret reality. Do not be fooled by expectations. Reality always eventually wins.

In the short term, expectations can seem very long term. Until, in the middle of the night when the rest of the world wakes up to see that we've 'Ooops', waged

more war in the name of QE. At least that's how it will be taken. And it will solve nothing. If they [the banks] had wanted to fix the problem they could have rootedout the fraud rampant in their culture with the first rounds of easing. [As they should be doing now, but apparently are not.] No-one in their right minds thinks the

banks have made a serious attempt to create a real solution. They have none.

Now that the 'powers that be' really know who they are helping, surely they will act in a way that protects the fragile planetary food and monetary systems.

Plausible deniability only works until the cat is out of the bag. It's Justice or Bust, b*T*ez.! [Please don't let it be bust.]

Flag as Offensive

QE on Nov 2, 6:50 PM said:

Quantitative Easing = More free money for the financial terrorists that destroyed Amercia

Flag as Offensive

Sooty on Nov 2, 7:43 PM said:

I don't trust Wikipedia.

Wikipedia doesn't say the "central bank" is a private cartel of banks that are beholden to no one but themselves. Wikipedia should state this clearly at the top.

The Reserve's chairman has to be approved by the government but that's it. Usually the government approves the board's choice anyway.

So Wikipedia fails in spelling it out honestly off the bat.

All the Rothschild central banks are privately-run institutions and their goal is to maximize profit for themselves.


7 of 8 9/26/2011 5:14 PM

Comments on this post are now closed.

The MSM has omitted this fact and keeps running articles about the Rothschild central banks that imply they are some kind of government body that is concerned

with making sure the economy runs well.

If they lower or raise interest rates, do quantitative easing or restrict the supply of money, it is because the bankers that make up the Federal Reserve benefitfinancially. Goldman and Morgan are members of the private Federal Reserve.

They are not going to vote to take actions that hurt themselves financially. They will do the opposite. And they will also capitalize on their insider-trading status tomake as much money as possible.

They try and sell the policies of the Federal Reserve as being good for the economy and that they are acting on behalf of the government, but they do nothing of

the sort. Why should they? They are a private for-profit organization. The bottom line for them is profit. Nothing else.

You can be sure there is always an agenda behind everything they do. They just don't state it publicly. They put forward reasons that the nation needs it, that theUS dollar is overvalued etc. If they want QE now, it will be good for them financially. What's their angle for selling QE II to the public?

I suspect it has something to do with TARP bailouts. The banks and other corporations that were given taxpayers' money can more painlessly pay back the moneyif QE is in place.

Flag as Offensive

longcatislong on Nov 2, 7:58 PM said:

copypasta copypasta

long cat is looooong

Flag as Offensive

Quantitative Easing (URL) on Jan 12, 4:19 AM said:

Interesting to know about the origin of Quantitative Easing that it is basically used by Central Bank and Bank of Japan. I want to include that itis a policy of government to increase the money supply by adding and buying their bonds and securities to lower the rate of interest inmarkets. Central banks tend to use it when interest rates are already been lowered to near 0% levels and failed to produce the desired effect.

Flag as Offensive

bunuunutma on Jan 19, 3:30 PM said:

Wikipedia doesn't say the "central bank" is a private cartel of banks that are beholden to no one but themselves. Wikipedia should state thisclearly at the top.

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8 of 8 9/26/2011 5:14 PM

what is quantitative easing

Economy & Finance