C1 – Advanced
The advent of the COVID-19 pandemic in 2020 has caused a great shock to the global economy. Governments’ solution was to release huge amounts in the form of stimulus packages.
Perhaps the biggest question in everyone’s mind is, where was this money from? How come banks do not produce as much money as we need in times of need? Instead, their response is quantitative easing.
Though the monetary policy quantitative easing has become common in the recent years, it is still in its nascency and the governments and economies have yet to uncover the extensive scope of its consequences.
Learn more about quantitative easing and why central banks can’t print unlimited amount of money even during severe economic crisis.
Discussion Questions:
- Why can’t central banks just print unlimited money even if it is to help an economy in crisis?
- Explain quantitative easing, buying bonds, and treasury bonds.
- Treasury bonds are considered as a safe form of investment. What is your opinion on this?
- In your opinion, when central banks buy government bonds/debts, does it only undermine a system that is designed to protect the economy or do you think these measures are actually necessary and helpful in stabilizing economies?
- Talk about the economic relief packages by your government as a response to the pandemic crisis.
- Share your thoughts on this statement by John Kenneth Galbraith, “The process by which banks create money is so simple the mind is repelled”.