What are the dangers of quantitative easing?
December 7th, 2011 | 
Author: Question by Jake: What are the dangers of quantitative easing?
What exactly happened in Japan regarding this, and why do some people seem to think it would work now?
Best answer:
Answer by TheLog
It did help in Japan, and after a while with it the deflation did stop, but the problem with it was that it came very very late in their crisis. They did not start the printing press before about a decade after the crisis started and by then people had gotten used to the deflation, which made it very hard to get out of, because people expected money to rise in value.
This time around in USA the Fed is going to be much quicker at getting the quantitative easing started, than the Bank of Japan was it, so that the US hopefully will not experience the long and dreadful slowdown Japan had.
The danger with quantitative easing is that it could bring inflation with it on the other side, if the Fed is not able to get the liquidity fast enough out of the system again, once the economy starts growing again. But Ben Bernanke has stated that the Fed is aware of that problem, and that the form the quantitative easing will take, will be one where it is possible to draw it back fast again.
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