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<p>[QUOTE=&quot;fatima, post: 1555704, member: 22143&quot;]Your analysis is incorrect because Qualitative Easing is not the act of printing money to buy assets. That is Quantitative Easing.&nbsp; The Fed is simultaneously participating in both activities.&nbsp; &nbsp; The Qualitative Easing part is what they then do with those assets once they are acquired.&nbsp; This is the part that most people don&#039;t understand&nbsp; because it&#039;s complicated and requires a thorough understanding of the differences and roles of base money versus circulating money.&nbsp;&nbsp; </p><p><br /></p><p>Remember,&nbsp;&nbsp; The Federal Reserve wants to increase the amount of cash in the real world (circulating money) but which it has little power to do directly beyond lowering interest rates.&nbsp;&nbsp; However once those rates hit 0 it&#039;s left with no options.&nbsp; You can make a loan 0% but if there are no customers, it doesn&#039;t matter.&nbsp;&nbsp; The Fed has to find other ways to get money into the economy and that is where Qualitative Easing enters the picture.&nbsp; </p><p><br /></p><p>Qualitative Easing - literal meaning = lower the quality.&nbsp;&nbsp; Hence by lowering the &quot;quality&quot; of money people will demand more of it.&nbsp; (or so the insane Japanese theory goes)&nbsp;&nbsp; They do this by taking the base money asset created by Quantative Easing (growing the balance sheet) and then using a complicated set of schemes to essentially make debt interest negative.&nbsp; i.e.&nbsp; You take out a loan for $100 and you end up with $105 when its said and done.&nbsp;&nbsp; Of course at the individual level, this doesn&#039;t happen.</p><p><br /></p><p>Where the scheme fails and why it hasn&#039;t worked in Japan in close to 2 decades, is that all of this money ends up in in creating other paper profits and doesn&#039;t do anything to stimulate the real economy.&nbsp; In fact it hampers it even more as companies who are making profits through the equities market see little need to invest in real work.&nbsp;&nbsp; </p><p><br /></p><p>Gold won&#039;t be going down since they can never de-leverage this mess.&nbsp;&nbsp; It&#039;s a one way street where turning back is too painful to endure but where there is nothing but an cliff at the other end.[/QUOTE]</p><p><br /></p>

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