Economics of the guide means: What is quantitative easing?

What is quantitative easing?

Quantitative easing (QE), often referred to as non-traditional monetary policy tools, but the fact is used in Japan since the early 2000s and is described later. Effectively zero, the central bank and the need to hire additional stimulus is deemed to understand why interest rates can not be negative, if ever imagine what you can dramatically reduce the savings bank. In your bed, because your money, for example, the same minimum value, the bank run occurs. Fundamental basis for monetary policy that is similar to QE works quietly pushing prices: a bear market rather than a bank or store (inflation value for money under your bed, forced to reduce investment spending where you under the bed) or (taesing (stashing)) taesing that this is not safe. In theory, this cycle is characterized by unemployment, the power and the desire to invest in companies adhere to small profits, small to maintain staffing yireugeeul, then you need to consume less prevent or reduce the impact of the recession means that it is artificially high for this job In order to perform an increasing demand for goods and services in order to reduce the length of the bud, or small pieces in order to avoid the recession of the above steps, such as going on the theoretical basis of the central bank, and more unemployment.

How does it work?

U.S. Department of the Treasury: the premise of universal and effective solution to the above facts and assumptions stimulus, QE is very effective, but is not limited to the assets of one economy, a particularly effective tool for stimulating, and we look at the large intestine. 0 people already have savings in a slow economy, it would be good for other investments in such bad shape would be very dangerous fear, bond, so the demand is particularly high during the recession. If you want to borrow a lot of people, you want to lend money to a loan from the people, you can choose to pay a low premium to borrow money in order to spend more on U.S. government bonds is low for these requirements to close FED steps now to buy more government bonds, than to almost zero, the U.S. government can not spend more cheaper bilrilreul reduces the yield of self-sustaining.

FED buying bonds as a loan for accounting entries money to buy government bonds was created. In fact, making money, so the theory (more money chasing the same goods, the product of the price increase, inflation is) to create inflation. FED interest rate is suppressed to zero artificial demand, investors realize savings shrink more quickly to invest in Treasury inflation generated by the virtual money, so. So they go to the risky asset class or to start spending more.

It's one?

To invest in the stock market is very poor movement of inflation environment, a good investment decision, go to all the risky assets, the consumer buying a home, or trying to persuade you to purchase the most fashionable theory, because, right at the point of financial assets. They are also sent to the car they are not in a recession, they consume the product. Mortgages, car loans, student loans, savings rates and government bond yields of all financial gains linked to the ghost, and the rate of rise in government bond, for example, student loans, bank loans, mortgages and use the money to reduce the national debt is are rushing to buy. This field speeds in the drive. Low ratios, and other charges of money out of the dash is suppressed because. Investors and consumers will stay low rate of false assumptions, you can borrow at affordable prices.