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Quantitative easing (view source)
Revision as of 15:03, September 16, 2012
, 15:03, September 16, 2012elaborate
'''''But this time, the Fed has promised that "if the outlook for the labor market does not improve substantially," it won't stop buying and could ramp up its spending further'''''.}}
'''''But this time, the Fed has promised that "if the outlook for the labor market does not improve substantially," it won't stop buying and could ramp up its spending further'''''.}}
In general, the Federal Reserve stimulates the economy by lowering short-term interest rates. However, when short-term interest rates are lowered to zero, the Federal Reserve turns to other less frequently used actions to stimulate the economy. The Federal Reserve calls these "quantitative easing." Basically, these involve the Federal Reserve purchasing longer-term bonds to lower the medium and long-term interest rates.
There is no free lunch, so "quantitative easing" is always at someone's expense. But because of the secrecy which continues to cloak the Federal Reserve, it is not always easy determining who is paying a specific bill.
There is no free lunch, so "quantitative easing" is always at someone's expense. In general, although the economy may benefit from quantitative easing, the people who rely on bond interest income are harmed by their reduced income.
==See also==
==See also==