If you’ve been reading about the markets recently, it’s likely you’ve heard about quantitative easing, also known as QE. The U.S. central bank engages in quantitative easing to influence the economy by increasing cash in order to stimulate economic activity. But how does QE differ from normal federal reserve open market operations? Also, how does U.S. quantitative easing differ from Japan’s quantitative easing program? Salman Khan of the Khan Academy explains the finer points of quantitative easing.
From the first video, you’ll understand:
- How quantitative easing differs from normal Fed operations
- The types of assets purchased by the Fed under QE
From the second video, you'll understand:
- The rationale behind engaging in QE
- How US "credit easing" differs from Japanese quantitative easing