When Bernanke started his speech at the venue immediately calm down, people are waiting for Ben Bernanke tell them what they already know about it for a long time. “If there are no other changes, now appears to be the time to take further action.” Bernanke said. The so-called for further action, the whole world knows that the Federal Reserve to step up, “wake up” money to stimulate U.S. economic growth. In the first 1.7 trillion into the end of quantitative easing in just 7 months later, what makes Bernanke once again betting on this policy?

The Fed was forced to “critical point”

Quantitative easing, the term from the beginning of the design there is a vague and distorted terms. The so-called volume, is the total amount of money invested, the so-called liberal, meaning that despite low interest rates, credit remains tight, need to be alleviated. “It is different from any of the common monetary policy, or it can represent a monetary policy, because it simply means that a given amount.” Southern Illinois University Edwardsville Campus Hall, Professor of Economics given The most simple explanation.

This policy is first to be known about the Japanese in 2001, when Japan has zero interest rates, but the economy is still in a long slump. November 21, 2002, when the Bernanke Fed is only in a speech to the Japanese out of the quantitative easing prescription. “Japan is suffering from deflation risk, near-zero interest rates, has remained at 1% inflation, rising unemployment, are plaguing the country’s economy at the moment, quantitative easing should be very suitable for them.” Bernanke said. It is this speech as Bernanke also won the “open air of the” nickname. “Quantitative investment money” into the market conditions for Bernanke to stimulate the economy in deflation means of bold conjecture.

GDP, interest rates, inflation, unemployment has become the practice of quantitative easing Bernanke doctrine of the four important factors. When these four factors reaches a critical value, the quantitative easing will be started. First quarter of 2009 GDP-0.6%; 0-0.25% of the historically low interest rates; record 25-year high of 8.1% unemployment rate and inflation rate of only 0.4% of the series was the White House can not see the point defined as a positive information data, as the Fed first started the background of the quantitative easing policy. March 19, 2009, after the U.S. Federal Reserve meeting on interest rates at the start of the printing press. After 14 days, G20 summit in London, the day the amount of liquidity will follow.

History is so similar. After 19 months, the U.S. economy appears to once again approaching the critical point. “The pace of U.S. economic growth is still too slow, the job market is extremely slow recovery restriction on consumer spending, companies do not invest heavily as expected, the current inflation rate was too low.” Bernanke issued on the day of action slogan, he said, out the reasons for their actions. November 2 -3 day Fed meeting seems to have become a pressing start button of the best quantitative easing point in time, coincidentally, after eight days, G20 summit in Seoul in turn held.

Approaching the threshold at day happens to coincide with the four factors and has pushed the Fed’s loose monetary policy, the launching pad, the only difference is perhaps something that serves the four factors of money on the quantitative scale will have an impact. Currently, the Fed’s opinion is the most consistent, to 100 billion U.S. dollars a month, the scale of 6 months to buy securities. However, there are 600 billion of liquidity available to run these venues are not large, in accordance with the law, the Fed can only buy debt secured by the federal government, including government bonds, mortgage backed securities Fannie and Freddie; they can also buy short-term municipal bonds . But if they want to buy corporate bonds, it must be licensed by Congress again.

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