Is quantitative easing to blame?

Cheming Yang

What is quantitative easing (QE)? There is official definition and there is lay definition.
Since the global financial crisis, both the Bank of England and the Federal Reserve of the US have used the policy of QE to revive economic growth. Usually, central banks control interest rates. But when interest rates can go no lower, a central bank’s last resort is to pump money into the economy directly. That is QE. The way the central bank does this is by buying assets using money it has created out of thin air.
In layman’s language, it means printing money to save the economy by the government. Can money create economy? In practice, money is a tool used in trade and only representative of the economy. Then how can printing money save the economy? In sum, it creates nothing. But in reality, it saves some countries, but harms others due to the phenomenon of globalization. Quantitative easing allows cash continue to flow for speculators when it is supposed to dry up. Speculators do not suffer the consequences of the economic failures caused by their own recklessness and are armed wtih the cash bullets provided by QE to speculate around the world. In other words, the speculators are armed by QE to plunder the world. As the old Chinese saying goes, it is wrong to use your neighbors as your dumpster. That’s exactly why this kind of policies is criticized by China recently in the WTO as irresponsible.
The world has allowed too much financial gambling. As a result, monetary polices become useful and powerful. However, we should not let bankers take the helms of economic development. Bankers thrive in financial successes and likewise in crises. That is why we are bound to experience a lot of financial crises if we believe in saving the economy by monetary policies. I am not saying we should not consider applying monetary policies to adjust economy. But with a flat world like the one we are currently in, the central bankers need to take into account not only the benefits their own countries will reap but also the harms that their policies will cause to the rest of the world. Otherwise, the losers will always be the less developed countries and smaller economies who are unable to withstand the flooding of international hot money.


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