Write a 1 page essay on Reaction paper 9.It is true that quantitative easing is done for the following reasons. foster employment, encourage lending, encourage borrowing, increase spending and reduce

Write a 1 page essay on Reaction paper 9.

It is true that quantitative easing is done for the following reasons. foster employment, encourage lending, encourage borrowing, increase spending and reduce interest rates. However, it should be noted that quantitative easing has various risks such as it increases inflation, reduces international trade, it is also a threat to the value of the US dollar, and it also encourages debt by both organisations and consumers. In relation to this, I think stopping quantitative easing after unemployment has fallen below 7 % will not be bad for the economy.

I agree with the author, if the rate of inflation increases from 2% to 2.5% then it will be prudent to stop quantitative easing. In addition, the rate of real GDP has been falling from 2.2 % to 2.4 % and finally to 1.7 %. It means the quantitative easing has very little effect. Furthermore, the reason why federation bank exist is to increase on a sustainable basis real per capita income. However much quantitative easing has various benefits it does not increase economic