ABC News posted a very positive op-ed regarding the Fed’s use of quantitative easing (QE), which the author nicely summarizes as “a form of stimulus, but unlike the earlier rounds of stimulus, the government is lending money with interest attached instead of giving it away or spending it.” (Emphasis added)
Looks like they deserve some credit.
There are two key elements that should be taken away from the use of QE as described by the article. The first is the ability to control how much the Fed injects into the economy when it is necessary and when they decide to pull back. The author warns that any talk of cutting some of this QE gets investors antsy. But there is little doubt it is an easier remedy to both control the effect of and slowly step away from as the market improves.
The second element is the simple recognition that an outside hand (a.k.a a government-type) helping the economy when it is needed actually works and shouldn’t be looked at as some catalyst for a coming communist takeover. The scariest aspect of the Tea Party’s of pull American politics to the far right is the notion any government meddling in the economy is wrong and will fail in the end. This is ludicrous and dangerous thinking that can exacerbate any economic slumps we hit in the future. Everyday when there is a delay in addressing economic downturns by the government is a day where recessions become closer and closer to outright catastrophes.
Actions like QE need to be touted for their versatility and their ability to address economic problems in the least invasive way a government can intervene in recessions. We need things like this to keep the economy stabilized and, more importantly, we need people to not be terrified when these actions are taken in the interest of the whole. QE still needs some time to play out and show its long term pros and cons but, for now, it seems to be a pretty smart step in the right direction for the economies that need it from time to time here in the U.S. and abroad.
