Quantitative Easing aka I Piss on your Currencies.
When politicians want to keep their jobs in the face of economic challenges they turn to a simple tool. Roll the printing presses, euphemistically called Quantitative Easing. QE in effect is telling the world “I piss on your currency.” Especially for the debtor who can print his own money in which the debt is also denominated and is accepted globally. QE 1: Nov 2008. Fed buys $100B agency debt + $500B mortgage-backed securities (MBS), followed by another $750B MBS. QE 2: Nov 2010. Fed buys $600B long term treasuries followed by another $400B treasuries. QE 3: Sep 2012. Fed buys $40B per month of MBS. QE 4: Sep 2012. Two can play the game! China injects 1 Trillion Yuan ($157B) stimulus package. Image credit: Earth by NASA, Tidal Wave by Pamela Heckel on Unsplash (edited). QE 5: Jul 2020. In response to the Covid-19 pandemic the Fed, PBOC, ECB, BOE, BOJ and other central banks unleash a tsunami of over $8 Trillion in monetary easing. Sources: Forbes,...