The view from abroad on quantitative easing and how what happens here affects ‘there’.
…at the core of QE2 is the US’s decision to spend its way to a (hopeful) economic recovery, rather than make cutbacks.
In theory, the Treasury prints more money, gives it to the banks who in turn loan it out to help grow small business. Again in theory, those businesses make more money and pay more taxes and therefore the Treasury gets the ‘paper’ money back. China, on the other hand, bypasses the middle man, the bank (no guarantee they will lend), and invests in infrastructure.
