I gave a short discussion of quantitative easing in the second post of my Inflation/Deflation series. I learned recently that the Financial Times web site has a nice explanation of how quantitative easing works to check deflation; if you’re a visual learner, you might find it helpful. You may have to register at the FT site to view it, but registration is free. The piece explains the risks of quantitative easing and makes an important point: although many economists believe that too much quantitative easing could be very bad and that too little easing won’t check deflation, no one knows for certain a priori how much quantitative easing is too much (or not enough).
Image by: RobBegbie