SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The coming US dollar crisis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Real Man who wrote (25428)12/11/2009 10:43:54 AM
From: HH  Read Replies (1) of 71455
 
QE defined

After the fed has dropped interest rates to almost nothing, it has lost the ability to stimulate with lower interest rates.

At that stage central banks start to employ quantitative easing (QE). QE is a natural extension of monetary policy once interest rates reach zero. Rather than influencing borrowing levels by changing the price of credit, the central bank attempts to influence borrowing levels by increasing the commercial banks' reserves (on which the total economy-wide level of credit is primarily based) – hence the name "quantitative easing".

The central bank does this by increasing the size of both sides of its balance sheet – in particular by creating money. That money is used to increase the level of excess reserves held by the commercial banks at the central bank. Commercial banks can then draw upon those reserves and lend them on to the private sector, so increasing borrowing levels. Technically the central bank buys assets (typically government debt) from the commercial banks (or other agents) and credits the commercial banks' reserves at the central bank. This results in an increase in the monetary base (currency in circulation plus reserves at the central bank) which may lead to a rise in inflationary pressures.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News