What is "Quantitative Easing"?

Jump to Last Post 1-3 of 3 discussions (4 posts)
  1. profile image0
    Ari Lamsteinposted 6 years ago

    What is "Quantitative Easing"?

    I've heard this term used by officials at the Fed but don't know what it means.  Does it just mean that they're printing more money?


  2. purnimamoh1982 profile image76
    purnimamoh1982posted 6 years ago

    Dear Ari,
    This term is often used synonymously with the concept of "Monetary Expansion". It is a process through which the FED (or for that matter any Central Bank in any country/economy) tries to increase money supply through various methods. As a practice, it has been more popular since the Global Financial Crisis that engulfed the world over last half decade. In a situation when even when rate on interest falls to an extent that no further reduction seems viable, but still borrowers are not interested in borrowing, depositors have lost trust on banks and banks find it difficult to manage liquidity, the Central Bank comes forward with the role of a banker of the last resort to lend to the commercial bank, mortgage the securities of the commercial banks and give them money, and in the extreme case prints new currency notes (not a common practice in recent years). The basic motive is to expand the money supply in the economy so that a potential fall in GDP can be restricted in a recession  by making money available in the hands of the economic agents to spend on commodities and services.
    The process operate as per the famous quantity theory of money MV=PT or M/P*V =T
    Where, M is the nominal money supply, V is the number of times money changes hands in a duration of time, P is the price level and T is the transactions or GDP. In a recessionary phase, since velocity of money is more or less constant for a culture depending on people's spending habits, the general Ptice level P is rigid in the short run, GDP can be increased through an expansion of money circulating in the economy.
    The easiest and most commonly practised method of quantitative easing is purchase of assets by the Central Bank (FED in this case) through which the Central Bank pumps in more money in the economy and reduces the liquidity crunch.
    Ari, I am not an economist. When I asked my husband (who is a teacher in the subject) about the term after reading your question, he explained this to me and I am presenting the answer as I understand it.  A very useful resource is available by the Bank of England http://www.bankofengland.co.uk/monetary … fault.aspx where you may find some more detail. I hope the answer if useful.

    1. profile image0
      Ari Lamsteinposted 6 years agoin reply to this

      Thanks for the great answer!

  3. JT Walters profile image69
    JT Waltersposted 6 years ago

    The short sweet simple answer is it is currency manipulation. The more currency there is available the less valueable it is.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)