A discussion on the quantitative easing policy

It later also bought asset-backed securities and equities and extended the terms of its commercial paper -purchasing operation. The amount of purchases was so large that it was expected to double the money supply. The Fed will follow a similar process with its holdings of mortgage-backed securities.

Banks then seek to make a profit by lending the excess to other banks. Reserves and the bond assets are on opposite sides of the balance sheet and thus tend to move in sync.

If quantitative easing itself loses effectiveness, fiscal policy government spending may be used to further expand the money supply.

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The QE campaign failed to meet its goals. Updated Jun 4, What is Quantitative Easing? In Decemberit announced it would end the program.

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Quantitative Easing Definition