海角大神

Skip to footer

Quantitative easing on the way?

Quantitative easing from the Federal Reserve is becoming more of a possibility. But it's hard to believe that a third round of quantitative easing would boost real economic growth any more than the last two did.

|
Jacquelyn Martin / AP
A statue of former Treasury Secretary Albert Gallatin stands guard outside the Treasury Building in Washington, Monday, Aug. 8, 2011, as stocks slid Monday amid a rout in global stocks after Standard & Poor鈥檚 downgraded the US credit rating. How likely is another round of quantitative easing from the Federal Reserve?

After the recent market rout, more and more people speculate that .

Given that the significant increase in risk aversion and money demand has undone some of the price inflation previously created by QE2, QE3 is certainly a possibility.

QE2 did cause an increase in money supply and [therefore] increase commodity prices, stock prices, consumer price inflation and corporate profits. However it also reduced real wages and total real economic growth was actually . There is little reason to believe that QE3 would be more succesful in increasing real economic growth.

--------------------------

海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

You've read  of  free articles. Subscribe to continue.
QR Code to Quantitative easing on the way?
Read this article in
/Business/Stefan-Karlsson/2011/0809/Quantitative-easing-on-the-way
QR Code to Subscription page
Start your subscription today
/subscribe