Sunday, October 14, 2012

Thin air


The Fed has faced a barrage of criticism over its decision to expand its balance sheet by a potentially unlimited amount in an attempt to counter high unemployment in the US. Opponents contend that the Fed’s third round of quantitative easing – nicknamed QE3 – has triggered volatile capital inflows into emerging markets, leading to an appreciation of their exchange rates, weighing on trade, and creating threats to financial stability.

Creating money out of thin air

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