Research Paper On Quantitative Easing

2032 Words Jul 18th, 2016 9 Pages
Research Paper on Quantitative Easing
ECFI 640
Fort Hays State University
Matthew Heiman
July 24, 2016

PRESENT THE ISSUE
The economic collapse that began in 2007 and officially ended in 2009 was brought on by subprime mortgage loans. A brief description of a subprime loan can be summed up using the definition found on Investopedia.com of “a type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. Quite often, subprime borrowers are often turned away from traditional lenders because of their low credit ratings or other factors that suggest that they have a reasonable chance of defaulting on the debt repayment (Investopedia.com)”. So what they’re saying is that people with marginal or poor credit were given loans that they shouldn’t have qualified for. The institutions providing credit became greedy and were not doing due diligence to make sure the people applying for these loans were capable of repayment. The prime rate is “the interest rate that commercial banks charge their most credit-worthy customers” (Investopedia.com).
This paper is written to illustrate Quantitative Easing from the implementation of the Federal Reserve System of the United States. There are other central banks around the world that also employed quantitative easing during the 2007-2009 global economic decline, but I will focus on the U.S. central bank.
These concepts are important to understand, because they set the stage for…
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