Assessing Quantitative Easing

The Wall Street Journal has a good graphic assessing Quantitative Easing - basically it shows that QE did not accomplish very much in terms of stimulating the economy. I think this is a bit misleading since I do not think that was really the goal of the QE program. Basically, it was to prevent deflation and move investors away from safe haven of government bonds (by lessening the benefits of holding bonds). The argument that a liquidity trap makes monetary policy all but ineffective seems to hold up. So, while QE may not have gotten us out of the hole we are in, it did prevent deflation which would have made things worse - and that is the real measure of its success.




Here is the graph:

Cleveland Fed's Interactive Balance Sheet

Here is a great teaching tool from the Cleveland Fed that shows all of the balance sheet tools the Fed has used in addressing the economic crisis. Check it out.