Monday, November 21st, 2011

Your Depressing Read For The Day

Here's John Lanchester reviewing the new Michael Lewis collection. As is always the case with Lanchester's writing about the financial crisis (and usually with Lewis as well), you will find yourself quite entertained throughout, and then you will finish it and think, oh God, we're SO SCREWED.

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David (#192)

And how is so much of this debt now being "paid for" … with "Quantitative Easing." A central bank implements Quantitative Easing by purchasing financial assets from banks and other private sector businesses with new electronically created money.

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank buys financial assets to inject money into the economy.

"The US Federal Reserve held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Fed started buying $600 billion in Mortgage-Backed-Securities. By March 2009, it held $1.75 trillion of bank debt, MBS, and Treasury notes, and reached a peak of $2.1 trillion in June 2010. Further purchases resumed in August 2010 as the Fed bought $30 billion in 2–10 year Treasury notes a month. In November 2010, the Fed announced a second round of quantitative easing, or "QE2", buying $600 billion of Treasury securities by the end of the second quarter of 2011. Get ready for round Three.

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