When writing my March6 blog entry I wondered when we would the United States be added to the list of countries resorting to printing money to boost the economy. That day has already come.
In the words of Goldman Sachs analyst Jan Hatzius, the Fed is going to the “kitchen sink” strategy of throwing everything it had to jolt the economy out of its downward spiral.
The Federal reserve is dropping a $1.15 trillion money bomb into the bond markets to boost lending. Yes this money will literally be eased out of the printing machine in major quantities (official term being “Quantitative Easing”). Ok maybe I am not using exactly the proper description they teach in the MBA program.Wickipedia defines QE as follows:
The term quantitative easing refers to the creation of a pre-determined quantity of new money ‘out of thin air’ through open market operations by a central bank as the start of a process to increase the money supply. It can, more simply, be understood as an indirect method of printing money.