The Power of Quantitative Easing

So long as you've got notes and coin in circulation, it's quite difficult to cut rates any further. So if you're a central bank, you don't want to say you're completely impotent in terms of budget policies. So what you do instead is say, okay, we can do something else. We've got another magic trick in our monetary toolbox. And in this case, it's quantitative easing. The way this works effectively is that the central bank goes out and into the market and buys lots of secondhand government debt That's already there and drives the price of it higher.

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