Question of the Day

From where does the Federal Reserve get the money to implement quantitative easing?

Correct Answer

Tell Me More

In the words of Ph.D. economist Benn Steil, the Fed implements quantitative easing "with newly conjured dollars." The Fed creates this money electronically and then uses it to buy large amounts of federal government debt and other assets. During and after the Great Recession, the Fed created about $3.5 trillion, and many economists were concerned that this would stoke inflation, but the Consumer Price Index grew more slowly than in the preceding 4 decades. However, the prices of assets like stocks and real estate increased dramatically, a phenomenon known as asset inflation. Asset inflation increases the wealth of those who already own assets, while making them unaffordable for others. Thus, from 2007 to 2016, the inflation-adjusted median net worth of U.S. families declined for all wealth groups except the top 10%.

DocumentationQE FactsQE Asset Inflation




Reload Question
Reload Question
Share via Facebook
Share via Twitter
Share via Email
Embed into your website
About the Fact App
Articles by Topic