Quantitative Easing Explained

Investment Management -

What is Quantitative Easing?

Welcome to our four-part series of 'Everything you always wanted to know but never dared to ask about the exciting world of central banking'. A light-hearted story about helicopters, printing presses and money creation. 

Published

15th March 2021

Author

Gregory Perdon

Category

The COVID economic crisis, the role of central banks and whether helicopter money can save the day. The world’s central banks (US Federal Reserve, Bank of England, Bank of Japan and the European Central Bank) play a crucial role in the global economy. Broadly speaking, they serve as both policy maker and lender of last resort and their objective is to help keep their respective economies in balance.

Our four-part series aims to demystify the world of central banks and monetary policy. Follow us here as the story unfolds. Complete the form to subscribe and receive the next issue direct to your inbox.

QE Explainer Comic Issue 1

Central Banks

Central banks monitor the economy and the financial system and pay particular attention to the speed and temperament of growth. What do they want to see? Monetary officials like when the temperature of inflation and the economy is not too cold nor not too hot, think of it like goldilocks, namely ‘just right’. But when growth begins to overheat, or a crisis hits, central bankers spring into action.

QE Explainer Comic Issue 2

Quantitative Easing

In the first issue we discussed the purpose of a central bank and the conditions around which they spring into action to interact with the economy. In this issue we look at what happens when the traditional techniques no longer work. Enter, quantitative easing (QE), one of the stars…

QE Explainer Comic Issue 3

Commercial Banking

Welcome to issue three of our tour through the inner workings of the world’s central banks. In the first issue we discussed the purpose of a bank, in the second we spoke about what happens when conventional policy needs to go unconventional and the function of fiscal policy. In this issue we let you in, momentarily, on a little secret about how the economy really works…

Helicopter money

Helicopter Money

In this fourth and final issue, we look at what happens when commercial banks can’t lend and/or businesses don’t want to borrow, central banks have already run out of ammunition and governments are desperate for growth. In this scenario, we reach the final frontier and are left to ask, what next?

Get in touch

If you would like to discuss how QE is changing the economic landscape, and what this might mean for your investments, book a review today by completing the enquiry form below, contacting us at Banking@arbuthnotlatham.co.uk or calling +44 (0)20 7012 2500.

To find out more about how we can help you invest for the long-term, please visit our Investment Management team page.

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Author -

Gregory Perdon

Gregory Perdon

Co-Chief Investment Officer, Arbuthnot Latham

gregoryperdon@arbuthnot.co.uk

+44 (0)20 7012 2522

Gregory Perdon has served as Arbuthnot Latham’s Co-Chief Investment Officer since 2011. He is Co-Chair of the Investment Committee, specialising in managing global cross asset mandates. He is also responsible for the firm’s Thematic Investment Research. He is regularly quoted in the financial press, guest hosts on Bloomberg Radio & TV and frequently serves as moderator, panellist or speaker at investment conferences in the UK and abroad. Gregory started his career at Oppenheimer after graduating from the American University of Paris in 1997.

Married, with four children, he enjoys raising funds for charities by climbing 4000m mountains in the Alps. Gregory holds both French and American passports, is a Chartered member of CISI and was named by Citywire as one of the Top 100 most influential wealth managers in the UK.