Expectations. It's all about expectations.
There isn't a more maligned or misunderstood policy than quantitative easing. Scaremongers from Zerohedge to bond guru Bill Gross to Harvard professor Marty Feldstein have told us it subsidizes mega-deficits by pushing interest rates "artificially" low, and risks turning us into Zimbabwe, but the opposite is true. Quantitative easing lowers deficits, raises interest rates, and hasn't even pushed inflation above the Fed's 2 percent target. Now you know, and knowing, in this case, is all the battle.
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