Easy money

Monetary measures,of the likes of Quantitative Easing of the US Fed  seek to increase the supply of credit and not an increase  of money supply to the economy .When Central Banks "stimulate" ,it is not about  physical currency but  a focus  on debt.   "Money"   in Banking , denotes  financial collateral /  equity capital. Central banks are not equipped to  increase the level of reserves, the prime means to circulate "liquidity", but  create only ledger money to prod the banking system into increased lending. Sadly though,the  liquidity through stimulus was largely  subverted by  the   finance  industry  getting preferential treatment from the government ,be it the massive  bailouts or the  right to borrow  huge amounts of  free money from the Central Banks for  risk free use. What was worse, banks then sat on idle cash ,not lending to the ground economy being overly concerned  about their balance sheets .While.the very purpose of banking  was  thus lost in default,an equal damage was caused by massive global transfers of dollar funds causing huge monetary and fiscal imbalances on lesser economies.We managed the post 2008 crisis well, but many nations could not and are still struggling 

Business Standard Nov 1