Quantitative Easing Withdrawal: How Bad Will it Hurt? By: Douglas J. Elliott

“Quantitative Easing: Desperate Measure for Desperate Times

• QE is a last resort, not an extension of normal monetary policy, because it carries serious costs and risks

• It was justified by the Great Recession following on the worst financial crisis in more than half a century

• We are lucky to have had a Fed Chairman who is one of the great experts on times like these

• But, withdrawal from QE, and tightening of monetary policy more generally after such loose conditions, will create problems

• The magnitude of these problems is hard to judge, because of the exceptional underlying conditions and the paucity of experience with QE”