Quantitative easing is a phrase that many of you were probably new to as of this year; however, it’s been around for some time. What is the true definition of this, and why does it matter? Let’s take a look into our economy, and get familiar with not only this term, but why it is so important and why it directly affects our economy.
What is Quantitative Easing?
The first place to start is to define what quantitative easing actually is. This term was used a lot in 2011, but how do you actually define it?
In a nutshell, quantitative easing is unconventional, in that it encourages the printing of more money. This is done because standard monetary policy has become ineffective, making it so that other means must be used in order to help boost the economy and get it back to its ability to spend freely and without fear.
So, how does this happen exactly? A central back injects money into the economy, just as if you were suddenly getting a drug injected into your arm for quick treatment. The reality is that yes, it really a quick fix. It’s all about the purchasing of assets from other banks, the question is do other banks have anymore assets to purchase?
Buying and selling government bonds used to accomplish this very thing, but is it still effective?
Why Quantitative Easing is Important
Those who want to know more about quantitative easing and why it’s important should understand that while government can do this and they believe it’s a great way to fix things, it’s not the answer. Quantitative easing is believed to keep inflation from falling below a certain point, but does it matter?
The truth is, this practice of injecting money into the economy simply doesn’t work, and it actually causes inflation to occur. While some take the stance that this is a solution to everything and it boosts the economy, all it does is make things worse.
Is it possible that instead of turning the printing presses on that the money could strictly be electronically accounted for? It doesn’t matter; no matter how money is injected into the economy it will produce inflation when it isn’t organically produced. The reality is that the economy is suffering due to greed, and this particular way of thinking as if it will solve everything.
Why Quantitative Easing Directly Affects Our Economy
So, now that you know what this quantitative easing is, it’s easy to see how it affects our economy, right? The U.S. dollar goes down and the price of gold goes up, which means it’s a perfect teeter totter every time. This is why gold is being purchased by the affluent, because as inflation rises it’s only going to get more interesting.
Are you ready to learn more about why it’s important to buy gold bullion, and how to use it? You can learn more about quantitative easing, and why the two are closely related when you CLICK HERE now.
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