Quantitative Easing (QE)

By Jason Fittler,

For those who would like to get a better understanding of how Quantitative Easing works I have attached a link to a YouTube clip which explains this in basic terms. 

Note it takes about 30 minutes so grab a cup of coffee and relax, it will be worth your time.

How the economic machine works by Ray Dalio.

The video is well done and gives a good run down on credit cycles and Quantitative Easing. Ray Dalio who narrates runs the world’s biggest macro hedge fund Bridgewater. He is outlining his framework for thinking about markets.

I would strong encourage everyone to take the time to watch this. It is important and will assist in your understanding of not only how the economy works but also what it is the government is doing for you.

The performance of your investments can be directly traced back to how the economy is going. And, therefore, what the Government is doing to assist.

Given our recent state election it is timely to watch this and get an understanding of what the government needs to do to repair our economy.

You can be the judge if they are getting it right.

Wikipedia Definition

Quantitative easing (QE) is monetary policy used by a central bank to stimulate an economy when standard monetary policy has become ineffective. A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the monetary base. This differs from the more usual policy of buying or selling short-term government bonds in order to keep interbank interest rates at a specified target value.