Quantitative easing

Now the Federal Reserve has effectively cut the target lending rate to zero, it only has one more weapon in its arsenal. Quantitative easing. Senior Editor Paddy Hirsch explains what this nuclear option it is, and what the Fed hopes itll do.

Category:

Education

Tags:

• Marketplace
• business
• money
• quantitativeeasing
• financialCrisis
• creditCrisis
• PaddyHirsch

[mikejadoti]

No, drawing the fed as "uncle sam" promotes the myth that the federal reserve is a federal agency. It's a *private bank* owned by bankers, but the rest is spot on, making the whole completely sickening.  No different than me printing money (out of thin air) to get the banks assets and buy up the treasury bonds (which are a debt of the american people). You, the people will work to pay me back the loan + interest, on money I created out of thin air.

[jaydt1124]

Should have went on to explain how the banks still don't lend the money handed to them by the Fed and instead invest it in commodities and equities markets. This being the reason for the bull market we saw for the last couple years.

[kktg1001]

why do central banks have so much power?

[mister9a]

@mikejadoti yeah, but you don't have the authority from congress to create currency backed by the US government. So it's a bit different.

[theredjediknight]

Its a complete FAILURE, all its done is allow banks to boost their balance sheets. While the rest of the real economy in the UK is suffering because they can't get finance and the government wants to make it easier for firms to fire staff.

So with a policy that works against each other, no wonder NO one will spend or borrow.

[joeyjobear]

@mikejadoti Everyone knows its a private bank, but it is the US central bank so labeling it as "Uncle Sam" is somewhat appropriate.

[yakuzasama01]

@reLENTless1897 Woow. I'm really impressed. You've used a clear and simple phrasing and you've supported your explanation a very highly relevant example. Thank yo very much!

[reLENTless1897]

@yakuzasama01 Been researching your question. Ill add to it soon.. So, I sell you a bond for $100 at 2% annual interest rate with yield to maturity 10 years. The next day my friend John offers you $110 for that bond. The interest rate on the bond that you purchased stays the same until maturity. However, if you sell him the bond for $110, how much is his yield? He gets 2% of $100 on a bond that he paid $110 for. So, his yield is less than two percent understand?

[reLENTless1897]

@flash3780 That was the intention was to create liquidity in banks and take the pressure off of them so that they can give out more loans. The Fed isnt printing money however, it is crediting US banks federal reserve accounts. This credit isnt a loan, it's the money that the Fed paid the bank to purchase some of their assets.

[reLENTless1897]

@Boobs1234ism which terms are incorrect? this is spam

[Boobs1234ism]

ur dumb