To QE Or Not To QE

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Amer­i­ca is a land of con­tention, and one of the most con­tentious top­ics here (I’m in Seat­tle as I write) is the impact of the Fed­er­al Reserve’s pol­i­cy of “Quan­ti­ta­tive Eas­ing” – oth­er­wise known as ‘QE’. The Fed­er­al Reserve has com­mit­ted to spend­ing $85 bil­lion every month buy­ing a wide range of bonds from banks, until such time as the US unem­ploy­ment rate falls below 6.5 per cent.

The Fed has imple­ment­ed this pol­i­cy because it believes it is the best way to stim­u­late demand in a depressed econ­o­my. Its crit­ics oppose it because they believe this mas­sive amount of ‘mon­ey print­ing’ must inevitably lead to ruinous infla­tion.

Read more: http://www.businessspectator.com.au/article/2013/5/27/economy/qe-quantitatively-irrelevant#ixzz2UktNyVvg

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.