Skip to content

finanaicla crisis

Quantitative Easing Big Scale – Definitions and US Study Case

photografy www.doitinvest.com possible rising of the us economy

photography www.doitinvest.com possible rising of the us economy

One of the latest causes of the Euro spiking up above 1.42 versus the USD was the quantitative easing policies applied by FED. If you are not familliar with the term, here’s the definition:
Quantitative easing represents the injection of money from a central bank into the economy, via the banking system. It works like this:
1st stage: the Central Bank tries to push the economy by lowering interest rates, which should encourage lending and therefore the consumption. In our case, FED interest rates are already at 0% and publishing negative interest rates would be a bit Japanese, meaning strange (what would it mean to put your monry on the bank and get less at the end of the deposit?!)
2nd stage: Central Bank pushes up the public expenditure, in the hope that money spent like this will push up consumption and persuade firms to invest. In US this is impossible too – because the public debt is huge.Read More »Quantitative Easing Big Scale – Definitions and US Study Case