Quantitative easing (QE) is when a central bank (such as the Federal Reserve) pumps money into the economy by various financial transactions, usually to increase asset prices and to create a moderate inflation. In September 2012, the Federal Reserve chairman announced a third round of quantitative easing or QE3; some critics have called it “more money printing.” The Federal Reserve announced that it would purchase $40 billion of mortgage-backed securities for an unspecified time period.
QE3 was called “QE-to-infinity” or “QE-to-eternity.” The name “QEternity” (QE + eternity) has been cited in print since at least September 13, 2012—almost immediately after the Federal Reserve’s QE3 announcement.
Wikipedia: Quantitative easing
Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions with newly created money, in order to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value. Quantitative easing increases the excess reserves of the banks, and raises the prices of the financial assets bought, which lowers their yield.
Expansionary monetary policy typically involves the central bank buying short-term government bonds in order to lower short-term market interest rates (using a combination of standing lending facilities and open market operations). However, when short-term interest rates are either at, or close to, zero, normal monetary policy can no longer lower interest rates. Quantitative easing may then be used by the monetary authorities to further stimulate the economy by purchasing assets of longer maturity than only short-term government bonds, and thereby lowering longer-term interest rates further out on the yield curve.
QE1, QE2, and QE3
The expression “QE2” became a “ubiquitous nickname” in 2010, usually used to refer to a second round of quantitative easing by central banks in the United States. Retrospectively, the round of quantitative easing preceding QE2 may be called “QE1”. Similarly, “QE3” refers to the third round of quantitative easing involving the purchase of mortgage-backed securities, announced in September 2012, following QE2.
Ben Bernanke And QE3++
September 13, 2012
One of the more interesting effects of the bond buying programs initiated after the financial crisis is that they don’t end. As one commenter said: “QEternity.”
FX & Me
Friday, 14 September 2012
Guess I don’t have to repeat what the Fed’s decision was in details here as you probably have already read it somewhere else. Gathering from the people that CNBC interviewed last night, the consensus has it that they were surprised by the ‘unlimited’ amount of QEternity (can I have a patent right on this word, Apple?).
SUNDAY, 16 SEPTEMBER 2012
Variations On a Theme Include QEternity
QE3, the Fed’s open-ended third round of quantitative easing, is getting a host of nicknames from traders and investment pros. Variations on a theme include QEternity, QEtc or QInfinity (and Beyond!). “Good Till Cancelled” is another. One unhappy participant dubbed it BarbeQE, as in, we are all roasted.
Did QEternity Finally Kill Stocks? S&P Futures in 1 Point Range Last 2 Hours
Submitted by Tyler Durden on 09/17/2012 13:14 -0400
Volumes are dreadful this morning in cash and futures. S&P 500 e-mini futures (ES) have seen a ridiculously low 5pt range since the open last night but in the last 2 hours, the ES has traded in a 1 point range between 1456 and 1457! Meanwhile Dow Transports are deteriorating again…
MONDAY, SEPTEMBER 17, 2012
A Driving Need to Normalize Terminology
Catherine Austin Fitts reaches conclusions similar to mine on the true purpose of QEternity (the best label for it so far), which is to clear the market of soon to be toxic mortgage backed securities. Her only error is in assuming that the GSEs are the intended beneficiaries of QEternity, but they only hold 10% of the outstanding MBS, while the TBTF banks hold almost three times that.
New York City • Banking/Finance/Insurance • (0) Comments • Monday, September 17, 2012 • Permalink