Quantitative Easing

What you'll learn

• ✓Explain QE and QT
• ✓Distinguish QE from 'money printing'

Lessons

1. 🪫
   Out of Room

   November 2008, the rate cut tool just broke
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2. How QE Actually Works

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3. Channels and the 'Money Printing' Myth

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4. Four Central Banks, Four QE Programs

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5. QT and the Inflation Debate

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• FOMC statement, November 25, 2008 (initial agency MBS and agency debt purchases, QE1 launch)
  Federal Reserve Board · institutional
  Source for the QE1 launch date used in lessons 1 and 4.
  https://www.federalreserve.gov/newsevents/pressreleases/monetary20081125b.htm
• FOMC statement, March 18, 2009 (expansion of QE1 to include 300B in long-dated Treasuries)
  Federal Reserve Board · institutional
  Source for the 300B Treasury expansion used in lesson 4.
  https://www.federalreserve.gov/newsevents/pressreleases/monetary20090318a.htm
• Plans for Reducing the Size of the Balance Sheet, May 2022
  Federal Reserve Board · institutional
  Source for the June 2022 QT start, the 47.5B initial cap, and the 95B post-September cap used in lesson 5.
  https://www.federalreserve.gov/monetarypolicy/files/FOMC_BalanceSheetPlans_202205.pdf
• Federal Reserve Statistical Release H.4.1 (Factors Affecting Reserve Balances)
  Federal Reserve Board · data
  Weekly balance sheet data backing the 900B (2008), 4.5T (2014), and 8.97T (April 2022) figures across all lessons.
  https://www.federalreserve.gov/releases/h41/
• The Crisis and the Policy Response, January 2009 (Stamp Lecture)
  Ben S. Bernanke, Federal Reserve Board · institutional
  Bernanke's own framing of credit easing and unconventional policy at the start of the QE era, used in lessons 1 and 3.
  https://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm
• The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy
  Arvind Krishnamurthy and Annette Vissing-Jorgensen, Brookings Papers on Economic Activity, Fall 2011 · academic
  Source for the ~100 bp QE1 yield drop and ~30 bp QE2 figure, plus the signaling vs. portfolio rebalancing channel discussion in lessons 3 and 4.
  https://www.brookings.edu/articles/the-effects-of-quantitative-easing-on-interest-rates-channels-and-implications-for-policy/
• The United Kingdom's quantitative easing policy: design, operation and impact
  Joyce, Tong and Woods, Bank of England Quarterly Bulletin 2011 Q3 · institutional
  BoE's own analysis of its 2009 Asset Purchase Facility, used in lesson 4.
  https://www.bankofengland.co.uk/quarterly-bulletin/2011/q3/the-united-kingdoms-quantitative-easing-policy-design-operation-and-impact
• Money creation in the modern economy, 2014 Q1 Bulletin
  McLeay, Radia and Thomas, Bank of England · institutional
  Authoritative explainer of why QE is not 'money printing' in the colloquial sense, used in lesson 3.
  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
• Unconventional monetary policies: a re-appraisal (BIS Working Paper No. 570)
  Claudio Borio and Piti Disyatat, Bank for International Settlements, 2015 · academic
  Reference for the careful mechanics of reserves vs. money in circulation, used in lessons 2 and 3.
  https://www.bis.org/publ/work570.htm
• ECB announces expanded asset purchase programme, 22 January 2015 (PSPP)
  European Central Bank · institutional
  Source for the PSPP launch announcement and 60B per month figure used in lesson 4.
  https://www.ecb.europa.eu/press/pr/date/2015/html/pr150122_1.en.html
• Quantitative and Qualitative Monetary Easing (QQE), Bank of Japan
  Bank of Japan · institutional
  BoJ's own description of QQE under Governor Kuroda from 2013, used in lesson 4.
  https://www.boj.or.jp/en/mopo/outline/qqe.htm
• Federal Reserve Statistical Release H.4.1 archive of weekly balance sheet snapshots (April 13, 2022 peak)
  Federal Reserve Board / FRED series WALCL · data
  Primary data for the 8.97T peak figure cited in lessons 1, 2, and 5.
  https://fred.stlouisfed.org/series/WALCL