What Is Quantitative Easing?

I like to keep abreast (gigidy) of the current affairs and goings on but sometimes some of the key terms throw me off. If you have come to this page, you’re not stupid. You, like me, just need a little clarification on what phrases mean.

Quantitative Easing:

It is quite complex and I actually don’t understand the finer details of it all, but just so we’re not all in the dark here, this is what quantitative easing means.

  • Central Bank (Like European Central Bank) will make up a load of money either by printing or created electronically.
  • Then they will by Bonds from places like insurance companies, banks and other finance related institutions.
  • After that, because these institutions suddenly have a wedge of new money to play with, they can start lending to people and businesses.
  • When people and business have more money, they can create jobs, spend more and grow more.
  • This then leads to a better economy for all! Brilliant… In theory.

Basically, QE is just printing more money. It’s good because we all have more money floating around. It’s bad because it devalues the worth of the money and prices start to get higher again.

Source: BBC News

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