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"For example, 10 years ago we had quantitative easing done by US/Europe, which led to subprime loans." QE did not cause subprime loans - QE was the response to
by rsync 8y ago
"For example, 10 years ago we had quantitative easing done by US/Europe, which led to subprime loans."
QE did not cause subprime loans - QE was the response to the effects of the subprime loan era.
There was no QE before the liquidity crisis and subsequent economic recession, although it had been discussed academically.
- vivafrance 8y agoOf course it did. The Fed bought up all the debt it could. This had two effects: 1) It caused investors to search for yield anywhere they could (subprime is a good place to start!) 2) For many types of debt investors knew they could always pass it on up to the Fed!