Quantitative Easing

• During this short period of time the Federal Reserver more than doubled its balance sheet
• Went from ~925 billion to ~2,250 billion
• The Fed purchased bonds with these funds
• The significant buying pressure pushed interest rates down

Quantitative Easing Criticisms

• The extra money flooded the stock, bond and real estate markets
• This caused the prices of these assets to skyrocket
• This made housing unaffordable for many people in the US
• QE drove down interest rates - which vastly reduced the incomes of US Savers and eroded their asset values from inflation
• By driving up asset prices and driving down interest rates, it vastly increased the wealth divide
• QE did not help the average US citizen (main street).  It did save large Wallstreet banks that were about to fail
• Resulted in a long-term period of negative real interest rates:
• Interest Rates were lower than consumer price inflation

Reasons for QE

• Fed claimed that it would increase share prices and thus consumption: Wealth Effect
•