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Economics
Quantitative Easing
When a central bank creates new money and uses it to buy government bonds or other assets to stimulate the economy.
QE is used when interest rates are already near zero and the economy still needs help. It lowers long-term interest rates and encourages banks to lend more.
It’s controversial because it tends to help asset owners (stocks, houses) more than regular wage earners.
It’s like the central bank printing money and pumping it straight into the financial system to get things moving again.
Real world: After the 2008 crisis and again during COVID, the Federal Reserve and Bank of England did huge rounds of quantitative easing. Stock markets and house prices rose fast, but it also contributed to higher inflation later.
💡 Quantitative easing is one of the most powerful (and debated) tools central banks have to fight recessions.