Quantitative Easing and its Impact in 2014

image courtesy freedigitalphotos.net and suphakit73

image courtesy freedigitalphotos.net and suphakit73

In 2008, as the US economy began its historic slide into the Great Recession, one solution to bolster the sagging economy was the Federal Reserve’s quantitative easing (QE) program. Each month, the Fed would purchase bonds such as Treasuries and mortgage-backed securities that banks were eager to dump. The Fed brought this debt onto its own balance sheets, freeing investors to purchase other securities such as stocks that would continue to move money through the financial system. This action was unprecedented in US history and meant to be a temporary fix. As the economy began to warm, speculation grew that the Fed would begin to taper the amount of bonds they bought every month. In the spring of 2013, the Fed announced that it would likely start that process by year end. Markets reacted with volatility, and emerging markets suffered quite a bit. Emerging markets depend greatly on US interest rates, which would rise with the end of QE. In September, markets steeled themselves for the start of tapering, but were surprised as the Fed again delayed ending the program. Finally in December 2013, the Fed announced that tapering would begin. Coupled with the news that Janet Yellen would replace Ben Bernanke as Fed chair, it was a bit surprising that the markets seemed to take it in stride after so much turmoil over the course of the previous year. Continue reading

Janet Yellen: A Matter of Qualification, Not Gender

yellenThis year, Ben Bernanke will leave his post as Federal Reserve Chairman and many are looking to Vice Chair Janet Yellen as a likely successor. If she becomes the next Fed Chairman, it won’t be a gender choice. It will be a wise business choice, even if she is the first woman to fill a role held by men for 100 years.

That is the general sentiment of 45 female economists who recently responded to a CNN Money questionnaire. The questions posed were: Continue reading