I know that in economic models it’s easy to explain, but in real life how does it work? How do buying bonds and lowering interest rates actually cause more people to have jobs? What is the chain reaction?
In: Economics
They don’t. The best known way to stimulate the economy and create jobs is to give money to poor people, who will immediately spend it on goods and services they need.
What quantitative easing accomplishes is creating stock market bubbles. Economists who advocate for it have made the fatal error of confusing the stock market for the economy. If stock prices are rising, that means more value exists in companies, who can therefore spend that money on hiring people, but they don’t do that. Best case scenario is they use that money to automate jobs away. Worst case is it vanishes into various shady funds connected to who-even-knows-where.
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