Quantitative Easing

guardian.co.uk  5 hrs ago  Comment 
NAB economists expect global headwinds to force cash rate to 1% by August 2017, raising prospect of unconventional policy The Reserve Bank of Australia could be forced to cut the cash rate to 1% in the next 12 months and even resort to US and...
Wall Street Journal  Aug 8  Comment 
For a while, it looked like QE’s star had faded a little. Negative rates had become the latest central-banking fad. But the Bank of England’s decisions last week mark a break with that trend.
newratings.com  Aug 5  Comment 
CANBERA (dpa-AFX) - Asian stock markets are mostly higher on Friday after the Bank of England reduced its key interest rate for the first time in seven years and expanded its quantitative easing. Nevertheless, investors are cautious ahead of the...
BBC News  Aug 4  Comment 
Central banks around the world have been using what's known as quantitative easing, or QE, as a way of stimulating the economy. What is it?
newratings.com  Aug 4  Comment 
LONDON (dpa-AFX) - The Bank of England reduced its key interest rate for the first time in more than seven years and expanded its quantitative easing as the "Brexit" vote deepened the case for a technical recession. The Monetary Policy...
Financial Times  Aug 4  Comment 
Quantitative easing has prevented deflation and the policy is now ordinary
newratings.com  Jul 28  Comment 
BRUSSELS (dpa-AFX) - The pound weakened against its key counterparts in European trading on Thursday, as European shares declined amid weak corporate earnings, as well as on caution that the Bank of Japan won't deliver radical stimulus at the...
Benzinga  Jul 22  Comment 
The Central Bank of the United States has several arrows in its quiver when it comes to monetary policy, or the method by which the Federal Reserve manages money for the country. One of the most often used is quantitative easing (nicknamed...
The Hindu Business Line  Jul 8  Comment 
The future is, as often, both worrisome — with the folly of central bankers’ continuous quantitative easing sure to cause another global crisis, and exciting — with scientists solving the problems c...


Quantitative easing is a monetary policy tool in which a central bank—like the Federal Reserve—floods the market with cash in an attempt to stimulate an economy in recession and to stave off deflation. The idea is that if the central bank floods enough cash into the market, it will set off the following chain of events:

  1. Banks and other financial institutions will build up larger and larger cash reserves
  2. Banks will finally decide to loosen their lending standards to utilize their excess cash
  3. Individuals and companies will start getting the loans they are seeking
  4. The economy will begin to recover as people and companies begin to spend again.Understanding Quantitative Easing

Quantitative easing involves flooding the market with cash. The question is...how does a central bank—like the Federal Reserve—flood the market with cash?

Quantitative easing requires the central bank to take the following three steps:

  1. Cut the short-term interest rate to zero percent
  2. Announce how long it will leave the short-term interest rate at zero percent
  3. Begin buying long-term securities—like Treasuries, corporate bonds and asset-backed securities

Why Would the Federal Reserve Resort to Quantitative Easing?

It seems that during good economic times, all we hear about is how concerned the Federal Reserve is with inflation. We can't let the economy grow too fast....We can't let the monetary base get too big....We can't just print money—the Fed says.

But during bad economic times, all of that seems to change. And during really bad economic times, we even start to hear about quantitative easing. But what does quantitative easing do for the economy?Benefits of Quantitative Easing

Quantitative easing can help consumers, exporters and financial institutions find their way out of a recession and offers some of the following benefits.

  1. Quantitative easing can lower longer-term interest rates by pushing down yields at the far end of the yield curve.
  2. Quantitative easing can lower deflationary expectations by promising to keep interest rates low for an extended period of time.
  3. Quantitative easing can stimulate exports by increasing the monetary base.

Connecting Quantitative Easing to Government Spending (fiscal budgetary security tools)

Although monetary and fiscal models are normally viewed separately, QE as a monetary tool is so similar to deficit spending that the two lend themselves to a common view based on their immediate purpose: each is concerned with national and global security--to prevent chaos in trade and tragedy among nationals working in their own country.

QE and DS create necessary demand to protect people and nations from economic crises that may bring casualties in very large number and very short order. Both can create demand without limit -- except for the purchasing power of money after they become effective.

Each can be partially controlled by ending them. When either has done more harm than good their common remedy is taxation to prevent hoarding and policing to prevent tax evasion.

Accordingly, QE and DS require intense monitoring while in progress -- preferably by extremely sophisticated data analysts with tools akin to those of a national security agency with the highest priority on effectiveness not their cost.


Video: Understanding Quantitative Easing. Learning Markets. Retrieved on 2009-01-24.

Speech: Chairman Ben S. Bernanke. The Federal Reserve Board (1/13/2009). Retrieved on 2009-01-24.

Quantitative Monetary Easing and Risk in Financial Asset Markets. The Federal Reserve Board (9/282004). Retrieved on 2009-01-24. Bold text

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