Quantitative Easing Explained
What the Federal Reserve is up to, and how we got here.
Quantitative easing (QE) is a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system.
This policy is usually invoked when the normal methods to control the money supply have failed. It has been termed the electronic equivalent of simply printing legal tender.
A central bank implements quantitative easing by crediting its own account with money it creates ex nihilo ("out of nothing").
Quantitative easing was used unsuccessfully by the Bank of Japan to fight domestic deflation in the early 2000s.
CPI: Consumer Price Index
Further reading at Forbes.com:
Economics by Cartoon
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