Earlier I had already provided definition of Quantitative Easing (QE) (see October 11, 2010 post). Here I would like to share some historical background of Quantitative Easing. When we look wikipedia about QE it describes that "The original Japanese expression for "quantitative easing" , was used for the first time by a Central Bank in the Bank of Japan’s publications. The Bank of Japan has claimed that the central bank adopted a policy with this name on 19 March 2001." I became puzzled to see that how can a concept like QE can be a new thing.
After some research on the topic, found the Truth the quantitative easing is not a new concept or evolution of any concept. CPS (Centre for Policy Studies, UK), has published a Paper on QE by George Trefgarne. In that paper George Trefgarne says that QE "QE is not a new idea. It was originally pioneered in this country by a Tory administration over 200 years ago, which in response to a banking crisis, flooded the system with funds, by printing money. QE is merely a fancy expression to describe the modern, technical aspects of that process."
I am also puzzled to see the wikipedia definition of QE as a recent one, despite the fact that QE is also used during Great Depression of 1930's. Richard G. Anderson in his paper (published in Monetary Trends) said that "During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities (half, however, was offset by a decrease in Treasury bills discounted at the Reserve Banks). At the end of 1932, short-term market rates hovered at 50 basis points or less. Quantitative easing continued during 1933-36. "
You can give a new term for a concept, but, concept like QE cannot be new at all. These are some historical Fact which I came to know on the road of unearthing QE.
