How Quantitative Easing Differs from Money Printing | QE Explained

No! Quantitative Easing (QE) is not the same as money printing. This video explains exactly what the meaning of quantitative easing is and what the differences are with money printing.

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5 BOOKS THAT INSPIRED THIS CHANNEL

The Narrow CorridorStates, Societies, and the Fate of Liberty

Money Changes EverythingHow Finance Made Civilization Possible

Adaptive MarketsFinancial Evolution at the Speed of Thought

House of DebtHow They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again

The Third PillarHow Markets and the State Leave the Community Behind

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Want to know more? Watch the video, or read it all in the script here

Narrated and produced by Dr. Joeri Schasfoort (University of Cape Town)

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In 2021, we can safely say that QE has become a staple in the monetary policy toolkit of central banks such as the United States Federal Reserve (fed), European Central Bank (ECB), Bank of England, and the Bank of Japan. This policy is also known as large scale asset purchases (and monetary easing). This makes sense because this is basically what happens. However, since the central bank is doing it, new bank reserves are created to buy these bonds. The central bank thus expands it balance sheet and, since reserves are money, it increases the money supply. However, with money printing, the central bank creates notes & coins, not reserves. This is important because reserves can only be used by banks. Also, the central bank takes government (and sometimes corporate) bonds out of circulation with QE. Since bonds are also used by financial institutions to pay each other (in repo markets), it could be that effectively the money supply doesn't change much.