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As the money works its way through the system it raises asset prices around the economy.
This lowers private-borrowing costs and raises asset values, boosting wealth and spending.There is a catch, however.
That would frustrate German critics, of course, but would probably be the healthiest thing for both the American and global economies.Alternatively, the Fed could move in a tightening direction as the influx of investment raises asset prices and constributes to a worsening of various "credit indicators".
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Asset purchases, naturally, raise asset prices.
Knock-on purchases would raise asset prices, growth expectations, and the price level.
When banks buy new securities, the newly created money flows through the system, raising asset prices and reducing interest rates.
Its actions, it hoped, would raise asset prices and end deflation.QE has now come to refer to several flavours of asset-purchase programme.
Shell counters this as follows: it has already said it is cutting capital spending by $15 billion; it now says it will raise asset sales to $30 billion in 2016-18.
Instead of tightening, policymakers should work harder to ensure that cheap money translates into new investment rather than higher prices for existing assets.Bubble-wrappedAll monetary loosening bolsters an economy, in part, by raising asset prices.
The disbursement of thousands of billions in quantitative easing both in the US and the UK from 2009 onwards was meant to raise asset prices – and assets are by definition in the hands of the wealthy.
Defending the policies Friday before an audience of central bankers and economists in Frankfurt, Mr. Bernanke said "there is considerable evidence" that securities purchases by the Fed have achieved their goal of raising asset prices.
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CEO of Professional Science Editing for Scientists @ prosciediting.com