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Noah Smith

Sizing Up QE Now That It's Ended

Did quantitative easing do any good? It probably helped end the Great Recession, though we'll never know for sure.
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Photographer: George Rose/Getty Images

When I was taking an advanced macroeconomics course at the University of Michigan in 2007, Miles Kimball, my professor -- and later my doctoral adviser -- explained to the class how to fight a recession. “Print money and buy stuff,” he exclaimed. Then, for good measure, he repeated the phrase three more times.

“Stuff,” in this case, meant financial assets. Kimball subscribed (and still subscribes) to the idea that macroeconomic management is all about money. When times are tough, investment is low and unemployment is high, the government -- i.e., the central bank -- should create money and exchange it for financial assets. If buying government bonds doesn’t do the trick, the bank can buy all sorts of other things -- housing-backed bonds, stocks, even houses themselves -- until the economy sputters back to life.