Trumpled (Alternative Leading)

[LP]

QE isn't printing money as such, its about banks buying govt bonds and driving down the cost of borrowing further and providing more stimulus to the economy. Its the last resort after interest rates have been driven down to nothing like we are slowly seeing... Next step is another GFC when share markets go bang with all this extra money inflating stocks...

I'm not an expert but I was told it's not "banks" but the central / reserve bank buying government bonds, which is a critical difference to commercial banks buying government bonds, it's the government / central / reserve bank buying it's own bonds to put cash into the system. The money they buy the bonds with was printed yesterday, and if you let the process run wild you can end up like Zimbabwe with 1000% inflation, so the governments walk a tightrope trying to balance the rate they print cash with the rate of GDP and other external sources of income!

A friend I have likes to describe it as "Your backyard pool trying to fill itself with it's own water!"

The US Government writes itself an IOU every time it prints some more cash, one that will never be honored!