QE for Dummies

Understanding the most outlandish monetary experiment ever c
Tuesday, February 5, 2013, 10:25 AM

A reader recently lamented:

I have been trying to get my head around the mechanism of QE. Not being an economist or experienced investor I don't really understand a lot of the jargon. The usual simple definition of QE as "thin air money printing" does not satisfy my need for understanding either. Have hunted for a description of QE for dummies that leaves me feeling like I get it, but with no luck. My difficulty is in understanding how thin air money gets into circulation.

So I'm going to do my best to answer this plea in as intuitive and straightforward a manner as I can. I, too, share the need to understand the mechanism of a process in order to feel like I have a grasp of it.  And I think it's critically important to understand QE (also known by its full name, "quantitative easing") and what it really represents. Because it is, without a doubt, one of the largest market-shaping forces of our times. » Read more


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During the Crash Course, you will often encounter numbers that are expressed intrillions. How much is a trillion?

A trillion is a very, very big number, and I think it would be worth spending a couple of minutes trying to get our arms around the concept.

Make no mistake, we should not be lulled into complacency simply because it is too big to really get our minds around.

Keep this lesson in mind as we discuss the total accumulated debts and liabilities of the US, which are many tens of trillions of dollars.