The Ethics of Quantitative Easing

Abstract: This paper describes quantitative easing (QE) as carried out by the United States Federal Reserve Bank since the 2008 financial crisis. The focus is on examining the metrics, goals, and results of QE followed by an ethical analysis of decisions made and actions taken. The goals and original intentions of QE were ethical.  If economic theory had proven correct in practice, the greatest good may have been accomplished for the greatest number of people.  The reality is that QE has not produced the desired consequences.  The actual consequences lead many to argue QE has not been an ethical policy.


The 2008 Global Financial Crisis

The economic crises of September and October 2008 came as unexpected shocks.  Americans, the US Government, and in particular, the Federal Reserve Bank, the country’s central bank, had to rescue the country and perhaps the world, from the effects of catastrophic financial events. The Fed quickly and decisively injected money into the collapsing financial system and became the lender of last resort. In December 2008, Ben Bernanke and the Federal Open Market Committee (FOMC) announced a huge, unprecedented plan to jump-start the economy.

Most are familiar with Franklin Delano Roosevelt’s New Deal and other reforms that came about during the Great Depression of the 1930s. Few realize the FOMC was formed as part of the Federal Reserve Banking system at that time.  The committee would come full circle a few decades later, as the US faced another serious depression. The FOMC creates and sets monetary policy to meet two objectives: price stability and full employment.  It is currently required by…