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  • FIRST POST
    • MSE Guy
    • By MSE Guy 6th Oct 11, 1:21 PM
    • 1,628Posts
    • 1,255Thanks
    MSE Guy
    What on Earth does quantitative easing mean?
    • #1
    • 6th Oct 11, 1:21 PM
    What on Earth does quantitative easing mean? 6th Oct 11 at 1:21 PM

    Just click reply to post.

    Last edited by MSE Guy; 06-10-2011 at 1:24 PM.
Page 1
  • vax2002
    • #2
    • 6th Oct 11, 1:24 PM
    • #2
    • 6th Oct 11, 1:24 PM
    Printing money and letting it loose in the economy.
    Work a treat in Zimbabwe....
  • tagq2
    • #3
    • 6th Oct 11, 1:32 PM
    • #3
    • 6th Oct 11, 1:32 PM
    l fully expect a series of follow-ups entitled "gold standard and fiat currency - an angry contrast of deflation and inflation", "fractional reserve banking - I wish I could do that with my money!", "the Federal Reserve - investment masterpiece or ponzi?" and "how to troll Internet Libertarians".
  • JohalaReewi
    • #4
    • 6th Oct 11, 1:52 PM
    • #4
    • 6th Oct 11, 1:52 PM
    Is it a euphemism for colonic irrigation ?
    • SnowTiger
    • By SnowTiger 6th Oct 11, 2:19 PM
    • 2,724 Posts
    • 1,730 Thanks
    SnowTiger
    • #5
    • 6th Oct 11, 2:19 PM
    • #5
    • 6th Oct 11, 2:19 PM
    Oh well, thanks for not explaining it. Probably best really.

    There's a more detailed explanation at http://en.wikipedia.org/wiki/Quantitative_easing.
    • James
    • By James 7th Oct 11, 10:27 AM
    • 2,005 Posts
    • 612 Thanks
    James
    • #6
    • 7th Oct 11, 10:27 AM
    • #6
    • 7th Oct 11, 10:27 AM
    In a nutshell:

    Taxpayers bailing the Bankers out (again)
  • Venusflytrap
    • #7
    • 7th Oct 11, 11:00 AM
    • #7
    • 7th Oct 11, 11:00 AM
    This series of videos is also worth watching: http://video.google.com/videoplay?docid=-2550156453790090544#docid=5352106773770802849
    • dtsazza
    • By dtsazza 7th Oct 11, 2:44 PM
    • 5,493 Posts
    • 6,978 Thanks
    dtsazza
    • #8
    • 7th Oct 11, 2:44 PM
    • #8
    • 7th Oct 11, 2:44 PM
    I disagree with the general assessment - the point of the "jargon" is that it refers to a very specific (and well-defined) product which only exists in the financial sphere. The name is accurate and refers to exactly what that product is. The complaint seems analogous to complaining about using the jargon term of referring to a creature as a "cat", without specifying that you mean a small domesticated short-haired feline mammal - just because you hadn't heard the term cat before. Jargon is often just a term for any specific (and useful!) words related to a given field that the reader/listener doesn't understand, and while it has negative connotations it shouldn't.

    We use names as labels - "CDS" refers to exactly that class of instrument, much more specifically and concisely than "insurance taken by lenders in case their borrowers don’t pay loans back" does.

    Of course the intended audience needs to be taken into account - there's no point using terms that you know of your audience aren't going to understand, if you intend to inform them. But the other side of the coin is the risk of oversimplifying things; at the risk of sounding snobbish, if someone doesn't know what CDS or quantitative easing refers to (and aren't willing to spend thirty seconds looking it up on Google), they're unlikely to have an understanding of the broader context anyway.

    In light of that, I see no problem in the official pronouncement being in the accurate "jargon" so that those who understand what's being said get it at face value; and then commentators translating it into simpler analogies for those that didn't get the specific definition. It's the best of both worlds that way.
  • rgchapman
    • #9
    • 7th Oct 11, 3:23 PM
    • #9
    • 7th Oct 11, 3:23 PM
    Spot on dtsazza. The jargon is there for the people who use it not the layman. If we the public do not understand it, that is either our fault (for not finding out) or the fault of those reporting it for not explaining it in plain English.
    No reliance should be placed on the above.

  • tagq2
    Shell shock -> Combat stress reaction
    Printing money -> Quantitative easing

    The terms on the right are more recent and may refer to a more precisely defined experience but constituent words have much less impact. "Oh, it's not shocking, it's just a reaction." "Oh, it's not [e-]printing, it's just easing."

    Carlin delivered a good monologue on this (it's got even worse than merely "PTSD" now).
  • MoneySaverLog
    It means the banks are given money, HM Government then HOPE that the banks will lend this out. More likely they will horde it all.

    To you and me that means there is more money out there, so paper money becomes worth less than it was before they printed it. This results in HIGH INFLATION.

    QE is NOT good news for savers, and is more bad news with interest rates so low the money sitting in the bank is now eroding away :-( The only solution I see is to risk capital for higher returns on the stock market, commodities and futures. But having fingers burn't in the past, feel that is a very risky strategy, so have to put up with these pittyful rates of return on investment with the banks.
  • CFC
    It's what devaluation of the pound is called now they don't control the exchange rates and have no gold. Money is printed but only given to chosen institutions. Wish they'd give it to me, I'd start the consumer upswing singlehandedly
    • Bloomberg
    • By Bloomberg 9th Oct 11, 10:22 AM
    • 628 Posts
    • 243 Thanks
    Bloomberg
    Falsehood

    Just click reply to post.

    Originally posted by MSE Guy
    Quantitative easing is basically putting more money into circulation in order to get the economy going. It is a big falsehood which will one day come back to haunt us in the form of rampant inflation. In the short term it may appear to stimulate growth but it is an illusion.

    The economy is in tatters due to years of overspending by both the government and private individuals. No matter how you dress it up we have not faced up to the problem. Putting money into circulation which should not really be there and having interest rates at 0.5% is merely papering over the cracks. We are by no means over the worst.
    Money is a wise mans religion
  • MoneySaverLog
    Quantitative easing is basically putting more money into circulation in order to get the economy going. It is a big falsehood which will one day come back to haunt us in the form of rampant inflation. In the short term it may appear to stimulate growth but it is an illusion.

    The economy is in tatters due to years of overspending by both the government and private individuals. No matter how you dress it up we have not faced up to the problem. Putting money into circulation which should not really be there and having interest rates at 0.5% is merely papering over the cracks. We are by no means over the worst.
    Originally posted by Bloomberg
    But it's not going to go into circulation, the banks are going to horde this cash, they are in massive debt and so someone comes along and gives you money, you say thank you very much I'll pay off my debts now.
  • CFC
    But it's not going to go into circulation, the banks are going to horde this cash, they are in massive debt and so someone comes along and gives you money, you say thank you very much I'll pay off my debts now.
    Originally posted by MoneySaverLog
    Correct. It ought to come to consumers if they want to kick start growth.
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