Why Quantitative Easing Has Not Saved the Economy

by Project Censored
Published: Last Updated on

Quantitative easing (QE) is supposed to stimulate the economy by adding to the money supply, thus increasing demand. Theoretically, it ought to work, but so far it hasn’t.  Ellen Brown finds that QE has failed because, instead of flooding the economy with money, most of it has simply sat in banks’ reserve accounts.  Money created on a computer screen never makes it into the real, producing economy.  As currently practiced, QE is “simply an asset swap,” Brown argues. 

Brown reviews the history of similar programs in Japan, twenty years ago.  Richard Werner, who invented the term, was advising the Japanese in the 1990s.   Werner contends that the Bank of Japan intentionally sabotaged his QE proposal and other central banks have taken the same approach since.  Japan continues to suffer deflation even after twenty years of QE.

US policy makers have not learned from Japan’s experience.  Much like in Japan before, Brown argues that, in the contemporary US, “reversing recession has taken a backseat to resuscitating zombie banks, maintaining the feudal dominion of a private financial oligarchy.”

However, real alternatives are possible.  Brown argues for a popular movement to  restore money power to the people and the government, which might galvanize the executive and legislature to stand up to the banks.


Ellen Hodgson Brown, “How the Fed Could Fix the Economy—and Why It Hasn’t, ”

Dissident Voice, February 24, 2013. http://dissidentvoice.org/2013/02/how-the-fed-could-fix-the-economy-and-why-it-hasnt/

Also published as:

Ellen Brown, “The Financial Instrument That Could Save the Economy- and Why It Hasn’t,” Truthout,  February 24, 2013.   http://truth-out.org/news/item/14728-how-qe-could-save-the-economy-and-why-it-hasnt

Student Researcher: Isabel Kinsolving, College of Marin

Faculty Evaluator: Susan Rahman, College of Marin