Principles of Macroeconomics / Unit 12 MAC 1125 short lesson, about 20 seconds
Quantitative Easing
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The idea
When short-term rates reach zero there is no room to cut, so the central bank buys long-term bonds and mortgage-backed securities instead. This is quantitative easing.
In practice
Central bank assets rose from about four trillion dollars in February 2020 to over eight trillion by late 2021.
Where people slip
Its effectiveness is disputed; the anchor rates later rounds below the first.
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