Quantitative easing, inflation and the US dollar
While the Fed has embarked on an aggressive ôquantitative easingö policy, it is not yet printing money and the policy will not lead to inflation in the next two years.
The US Federal Reserve has started aggressive monetisation, dubbed ôquantitative easingö QE, since the collapse of Lehman Brothers and AIG in mid-September 2008. This is evidenced by the fact that the FedÆs balance sheet, as measured by the ratio of the monetary base plus excess reserve to GDP, has soared from $900 billion or 6% of GDP, which is about typical to over $2.3 trillion or 16% of GDP since then.
Reflecting this massive liquidity injection is...
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