Quantitative Easing - is that a solution?

So what runs the economy? Its simple. Money runs the economy. So in a down economy where banks are out of money to lend people someone has to pump money in the economy so that the flow gets going. Central Bank does it. Central Bank prints money and buys the financial assets such as government bonds and corporate bonds called as open market operations. Thus this process creates enough revenues for the bank to start lending money to people.

Quantitative Easing is a monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate/ discount rate are close to zero.

The Federal reserve Board manages the interest rate environment through monetary policy as mentioned above "Quantitative Easing". An interest rate cut or down to zero means that the economy is in recession. Lowering interest rates allows people to spend more and also Federal Reserve indulges into open market transactions by buying government debt from banks and supplies money to Banks.