InsiderFlow › Glossary › What is quantitative easing (QE)?
QE is the central bank creating money to buy securities in the market: the unconventional weapon used when rates are already at zero.
By buying bonds in huge quantities, the central bank raises their prices and lowers their yields, pushing liquidity into the system and investors toward riskier assets. Inaugurated at scale after 2008, taken to the extreme in 2020.
The reverse — quantitative tightening (QT) — drains liquidity and historically weighs on markets. The debate over QE's side effects (bubbles, inequality, the 2021–22 inflation) remains among macroeconomics' fiercest.
On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.
It creates electronic bank reserves to buy securities: not banknotes, but the monetary effect is real.
In 2010–2019 it didn't; in 2021–22, combined with fiscal stimulus and supply shocks, it contributed to the surge. The academic debate continues.