Quantitative Easing Explained – Midweek Infographic

If you follow any financial news sources such as CNBC, The Wall Street Journal or Bloomberg, you’ve heard quantitative easing mentioned a few times.  For most people, the term may seem completely foreign.  What most people outside of the financial industry are unaware of is the enormous impact that this Federal Reserve tactic has on the economy and your purchasing power (some may say short term).

The Fed has three primary responsibilities – control inflation, create jobs and keep interest rates low.  These monetary policies are designed to promote sustainable economic growth.  In order to accomplish these goals, the Fed injects or withdrawals money from the financial system.  More money simply means easier access to capital resulting in increased consumer spending and the results are the opposite when money is taken out of the system.

Today’s infographic can be found on Mint.

Quantitative Easing Infographic

I love how easily this infographic explains the What, Why, When and How of quantitative easing.  A complex topic is covered is such as simple and effective manner.

My favorite part of this infographic is the “In plain English” translation below each concept.  This makes it simple for somebody with little or no financial education to see the reasoning and effect of quantitative easing.

Readers: Has this infogtaphic helped you?

Do you think QE1 and QE2 were effective? Do you think we’ll see a QE3? If so, will the results be lasting or just temporary?

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Comments

  1. I think Mint does a great job with these infographics. I honestly think that we will see another round of quantitative easing. Mostly because the world economy is still in a precarious state and any jump in rates is sure to derail the current recovery. (slow as it may be)

    • I think you’re right LaTisha, we will most likely see QE3. Personally, I’m not a fan of too much government interference, but the market is already factoring in the possibilities of another injection of cash.

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