Quantitative Easing refers to the practice of pumping money into a nation's economy so that banks are encouraged to lend. The government injects money into the economy with the hope that people and businesses will be able to accelerate more. There is a greater chance that an economy will come back to life when spending increases. In quantitative easing the government buys its own bonds such as gilts, or bonds issued by companies and other assets. This means that commercial banks will get more money in their accounts at the central bank, which in return gives them the confidence to increase lending to customers and each other. Extra borrowing increases the liquidity and credit circulating in an economy. The US Federal Reserve is not a government agency. It is a private institution working courtesy of the United States government. Acts as banker for all other US banks. It is permitted to operate with substantial independence. However, the US Congress can modify the powers of central banks or even eliminate them. It was created by US government officials and the nation's most powerful banks under the Federal Reserve Act of 1913. It was created out of self-interest. Today, however, most people consider it a necessity and, for some, a necessary evil. The Federal Open Market Committee met in January 2009 and the information received showed that the economy continued to contract. There have been many job losses, decreased equity, and housing wealth and tight credit conditions have weighed on consumer spending. There has been a reduction in inventories and fixed investment due to weaker sales prospects and difficulties in obtaining credit (Alloway, 2010). US exports had plummeted as many major trading partners also lost... half their paper... it could have disrupted the global recovery. Bernanke, however, insists that buying back US government debt with newly created money is necessary to stave off deflation and put more Americans back to work. Works Cited Alloway Tracy. The banking system is still in crisis. Financial Times, November 2010. Retrieved from http://search.ft.com/search?queryText=quantitative+easing&ftsearchType=type_newsElliot Larry and Inman Philip. “US Federal Reserve” Times Online, March 5, 2009. Retrieved from, http://business.timesonline.co.uk/tol/business/economics/article5850466.eceEconomist Washington DC. “Quantitative easing is not loved or appreciated, but it works.” November 4, 2010. Retrieved from http://www.economist.com/node/17417742Wall Street. “The end of quantitative easing”. March 21, 2011. Retrieved from http://wallstreetchalkboard.com/the-end-of-quantitative-easing/