Adoption of Two-Step Quantitative Easing by the Federal Government Following the economic crisis of 1923, there was extensive printing and distribution of money, bringing the concept of quantitative easing into play. The term quantitative easing refers to an unconventional monetary policy instituted by a central bank to stimulate the economy. This is usually spurred by the failure or ineffectiveness of conventional monetary policies. This involves the purchase of government bonds by the central bank and other financial assets using new money that the bank has not printed but created electronically. The idea behind this move is to simultaneously increase the money supply and the banking system's excess reserves. Once started, the financial assets of the purchased goods are increased, thus decreasing their return. This should be maintained until the return exceeds zero (Larry, 2009). However, this is only successful when it does not end up changing the objectives of monetary policy. Quantitative easing is instituted when short-term interest rates are close to zero, making expansionary monetary policies inapplicable. This is due to the inability to lower interest rates through the purchase of short-term government bonds. When such a situation occurs, it is necessary to resort to quantitative easing so as to stimulate the country's economy (Bernanke, 2009). In early 2009, the US economy was facing a deep crisis. The economic crisis of the time was sinking its teeth into the American economy. The economy's inflation was at an all-time low. Consumer spending has also suffered an economy-threatening slump. There were low levels of employment, a combined scenario for an imminent… middle of paper… they are known to have achieved great success leaving no doubt that QE2 will achieve the same result if it does not surpass its predecessors. QE2 is therefore the necessary evil that America has been waiting for since the economic crisis began. With this stimulus, the economy will return to its former glory. It may be slow, hence the current criticism, but one would expect nothing less in such desperate times. Desperate moves are thus predicted, as well as their possible benefits. Works CitedBernanke, Ben, “The Crisis and the Policy Response.” Federal Reserve, 13, January 2009. From;http://www.federalreserve.gov/newevent/speech/bernanke200900113a.htmElliot, Larry, “Guardian Business Glossary: ​​Quantitative Easing.” The Guardian, Web. 8 January 2009. Flanders, Stephanie, “Is quantitative easing really just printing money?” BBC News, Web.12.59pm UK time, 18 February. 2009.