How The "QE Economy" Works (And Why It Doesn't) In One Giant Flowchart
From liquidity-driven perception to the Keynesian endpoint economic reality... just follow the arrows...
(click image for large legible version)
Or, as Bridgewater notes,
The effectiveness of quantitative easing is a function of the dollars spent and what those people do with that money.
If the dollars get spent on an asset that is very interchangeable with cash, then you don’t get much of an impact. You don’t get a multiplier from that.
If the dollar is spent on an asset that’s risky and very different from cash, then that money goes into other assets and into the real economy.
That’s really how you see the impact of quantitative easing.
Source: $hane Obata @sobata416
- advertisements -