"Quantitative Easing" Explained

An excellent piece at the Financial Times on “quantitative easing” or what we used to call “printing money”. “Quantitative easing” just sounds so much better, doesn’t it? Almost like a yoga position. Downward dog…quantitative easing…all kind of peaceful.

“Quantitative easing” is what happens when supply in the bond market crowds out demand or what if they gave a bond offering and nobody came. Well, maybe not nobody, but few enough buyers to cause a “failed auction” (see “Bond scare as German auction fails“). The Federal Reserve then would buy the treasury bonds that couldn’t be sold. If you think that this describes the government buying from itself….