Quantitative Easing

Economics

Quantitative Easing (QE) is the Federal Reserve's purchase of Treasury bonds and mortgage-backed securities to inject money into the economy when interest rates are already near zero. The Fed creates money to buy bonds, increasing the money supply and lowering long-term interest rates. Major QE programs: 2008-2014 (post-Financial Crisis, $3.5T+ asset purchases), 2020-2022 (COVID response, $4T+). Goals: stimulate borrowing, support asset prices, prevent deflation. Critics warn QE inflates asset bubbles and worsens wealth inequality. Quantitative Tightening (QT) is the reverse — letting bonds mature without reinvesting, reducing money supply. The Fed has been doing QT since 2022.