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Allison Schrager

It’s Now Clear That QE Was a Colossal Policy Mistake

There’s no convincing evidence that central banks’ purchases of trillions of dollars of bonds and other financial assets helped any economy.

Acknowledging failure is a first step.

Acknowledging failure is a first step.

Photographer: Chip Somodevilla/Getty Images 

The great quantitative easing experiment was a mistake. It's time central banks acknowledge it for the failure it was and retire it from their policy arsenal as soon as they’re able.

Since the global financial crisis of 2008, an integral part of central banks' play book in the US, the UK and the European Union has been QE — the practice of buying up long-term bonds and mortgage-backed securities. QE is supposed to work by lowering long-term interest rates, which boosts demand and increases lending and risk-taking.