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Quease yourself

Well, for once US government policy is following a example from the UK – and so it’s all together down the road of inventing new money. The US Federal Reserve banks will be buying large amounts of public debt with new paper assets. Here we are learning to know this process as quantitative easing, or, queasing for short. In the US, Chairman of the Federal Reserve Board of banks, Ben Bernanke, prefers to call it credit easing.

The initial amounts are very large indeed, although, typically, the FT have found a nice way of bringing it down to earth with an illustration (although I see they’ve found it from Mint.com).

Inventing money on this scale often acts against the value of the national currency and makes, in simple terms, paper money worth less.

UPDATED: 19th March 2009. The BBC is reporting declines in the value of the US dollar against a range of other international currencies. This is important because the US dollar is often though of as the global ‘reserve’ currency. This means that lots of national and corporate investors have traditionally liked to hold a lot of wealth in dollars because it has felt a secure investment.

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