If you follow Financial news, you no doubt have heard of the Fed decision to inject another 600 Billion Dollars into the system by purchasing Treasury Bonds and to “maintain low interest rates” in a strategy dubbed “Quantitative Easing.”
Quantitative Easing (QE) is an extreme monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system. In short, it is printing money.
QE can trigger higher inflation or even hyperinflation if too much money is created. It can fail if banks are still reluctant to lend money to small businesses and households in order to spur demands.
To put it simply, people who have saved money will find it is devalued by inflation; however those who have debt will see the value of that debt decline. Those who own homes will see the value of the increase as more devalued dollars are needed to purchase the home. The value of the debt on that home will decrease as the number of dollars needed to settle the mortgage will remain constant and can be paid with future devalued dollars.
Before the Fed decided to force this policy on us, maybe they should have taken a popular vote. Oh wait, voting is a right in democracies not, dictatorships.
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