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Bitcoin: Quantitative Easing; The Fed’s Gift that Keeps on Giving
Quantitative Easing: Inflation in a Nutshell
QE is a complex policy in which open market operations between central banks and member banks create monetary expansion, meaning that more money flows throughout the economy. This is accomplished through an atypical monetary policy aiming to increase the money supply. Typically, a central bank purchases bonds and other securities from smaller public banks, which leads to an increase in liquid capital. Theoretically, this increase in cash supply mixed with low interest rates encourages consumer and commercial lending and stimulates the economy.
Sounds all in well, doesn’t it? not so fast. The process of performing QE is a major contributor to wealth inequality and the reason for this is quite simple. The demographic who own financial assets are usually wealthy and when the money supply increased, the exchange rate of the dollar was weaker in comparison to most assets. For example, say you’re at an auction and someone in the crowd is artificially driving the price higher, this is the same concept, but through inflation.
