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What is quantitative easing? : Debt Declaration – Bad Credit Help & advice, Debt Settlement Tips
Debt Declaration – Bad Credit Help & advice, Debt Settlement Tips
Finance & Loans

What is quantitative easing?

July 4, 2012 by · Leave a Comment 

There is so much talk about a third round of quantitative easing or commonly known as QE3 in news media. What is quantitative easing?

Quantitative easing is generated by the Federal Reserve or central bank of a country to ease the supply of money to stimulate a country’s economy when normal economic conditions and growth is unable to generate economic growth. This may be done by the Federal Reserve or a central bank of a country by buying or selling of government bonds. This action results in excess money reserve with banks that can generate growth.

During the financial crisis of 2008, the Federal Reserve started buying $600 billion worth of mortgage backed securities in November 2008. By the end of June 2010, the Federal Reserve held $2.1 trillion worth of bank debt, mortgage back securities, and treasury notes. This later became the QE1 or quantitative easing one.

In November 2010, the Federal Reserve announced that it will buy additional $600 billion worth Treasury securities that was dubbed as the “QE2” or second round of quantitative easing. This lasted until June 2011.

Since the U.S. economic growth is showing very dismal growth, many economists and other professionals expect that the Federal Reserve will announce another round of quantitative easing ( QE3) soon.

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