What is quantitative easing?
In: Economics
Ignore all the words in “Quantitative Easing”, they don’t mean anything. It’s the central bank giving out large loans to other banks. The central bank prints money. In a fiat currency like ours, they have an infinite supply. They buy bonds in bulk. IE, money from nowhere goes into the banks and now they have more money to loan out themselves. Bonds have interest rates and such, so it’s not money-for-nothing. But in financial terms it’s about as close as you can get.
This would be disastrous if inflation is a worry, but if the economy is sluggish and inflation is alright, they can give money to the banks to try and liven things up. It DOES solve any worry about deflation.
You know how you work hard for your money? Well if the banks aren’t doing so hot, they’ll just give banks more cash to play with.
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