Quantitative Easing (QE) = Devalued Money
Government rulers used to try to gain money by taking small shavings off of gold coins and then create new gold coins with the shavings. The amount of gold stayed the same, however more coins were made. The rulers tried to do this without the people knowing. As this continued people started noticing and started requiring more (now smaller, thus devalued) gold coins for the purchase of an item. This is inflation. Blog: Is There really Inflation?
They also started to realize the rulers were stealing from them every time the coins went thought the hands of the rulers. If a certain quantity (100) of coins represents a certain amount of assets such as land (one acre) then each coin is worth 1% of that acre. If someone adds 10 coins to the 100 and keeps the assets the same, then each coin is now worth about 0.9% of that acre. The acre of land does not change value, the coins changes value. It now takes 110 coins to buy that acre when it use to take 100.
The same thing is happening in today’s economy! Today they call this quantitative easing and is done digitally. The Fed states that it is stimulating the economy, when in reality they are shaving off 1% of the worth of our dollars every month and digitally lending this money to the banks so that the banks
can lend us the money that they just stole by digitally shaving off the worth of currency and just adding new coins for the same value of assets. When people who trade on the stock market hear that there is more QE, they bid up the value of stocks of companies, not because the value of the company is greater, but because the value of the dollar is now devalued.
For a solution please check out Haley2024 monetary policy.