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QE involves electronically creating money, which the Bank uses to buy assets – mainly government bonds, known as gilts – from investors in financial markets. That pushes down long-term interest rates – a bonus for the economy – and gives the banks more money to lend out. The Bank doesn't actually print banknotes, it just credits investors' accounts. Its governor, Mervyn King, hates the phrase "quantitative easing" and prefers to call it credit easing.
Originally posted by Freeborn
reply to post by facchino
I'm not ashamed to admit it but I haven't got a clue what it's all about.
Allegedly we are in the mire because there has been too much lending.
So The Bank Of England 'creates' £75billion to give to the banks who in turn will lend the money out. But I thought it was too much lending that caused this whole sorry mess?
And I thought quantitative easing was generally used when there was the threat of zero inflation or deflation?
Surely we aren't at that stage as everything is getting much dearer.
And there's also a concern about interest rates or something.
I am confused to say the least.
I think it's probably all a ploy to over complicate things and to help the wanker bankers screw us over yet again.edit on 8/10/11 by Freeborn because: (no reason given)