The US Federal Reserve has embraced aggressive, open ended quantitative easing (QE).

Continued monetary easing via very low Federal Funds rates

He has adopted innovative new methods of monetary easing.

The Fed is hardly alone in embracing unconventional monetary easing.

Simply put, we live in a world in which there is too much supply and too little demand. The result is persistent disinflationary, if not deflationary, pressure, despite aggressive monetary easing.

After all, while the previous rounds of US monetary easing have been associated with a persistent increase in equity prices, the size and duration of QE3 are more substantial. But, despite the Fed s impressive commitment to aggressive monetary easing, its effects on the real economy and on US equities could well be smaller and more fleeting than those of previous QE rounds.

The Fed s monetary easing did temporarily contribute to a weaker dollar, which boosted net exports.

Unfortunately, the combination of aggressive easing in the US and a much more guarded attitude in Europe obfuscates the message.

Second, while monetary policy has limited impact when the problems are excessive debt and insolvency rather than illiquidity, credit easing, rather than just quantitative easing, can be helpful.

Monetary policy is constrained by the proximity to zero interest rates and repeated rounds of quantitative easing.

The government s prompt action to counter the crisis fiscal stimulus, growth packages, and monetary easing proved effective.

Third, in response to slower growth and lower inflation (owing partly to lower commodity prices), the world s major central banks pursued another round of unconventional monetary easing lower policy rates, forward guidance, quantitative easing (QE), and credit easing.

The only effective anti inflation strategy entails aggressive monetary tightening that takes policy rates into the restrictive zone.

The three arrows in Abenomics are fiscal spending, deregulation of cosseted sectors of the Japanese economy, and monetary easing.

The primary impact of monetary easing is usually to stimulate demand for housing and thus the volume of construction.

Nor could monetary policy help very much. Quantitative easing is constrained by above target inflation in the eurozone and UK.

Furthermore, America officially joined the East Asia Summit in 2011, easing concerns in the region about China s increasingly aggressive posture in the South China Sea.

A majority of the Fed s governors believes that aggressive monetary expansion has reached, if not exceeded, the bounds of prudence.

That is both logical and rational and thus not something that the US Federal Reserve can offset with unconventional monetary easing.

But, following monetary easing and fiscal expansion, it is Abenomics third arrow that will prove most important and most politically challenging.

Both also face major price distortions, owing to quantitative easing by monetary policymakers, which has led to negative real interest rates.

Through its unconventional monetary easing, the Fed is attempting to create a shortcut around the imperative of household sector balance sheet repair.

The crucial policy issue ahead, however, is how to time and sequence the exit strategy from this massive monetary and fiscal easing.

Other commodity prices had risen rapidly in the early 1970 s, in direct response to monetary easing in the US and elsewhere.

As the ongoing recession exhausts the traditional instruments of monetary policy, central banks are opting for new rounds of quantitative easing (QE).

The market s lack of response was an important indicator that monetary easing is no longer a useful tool for increasing economic activity.

Second, they overestimated the extent to which quantitative easing (QE) by the monetary authorities that is, printing money could counterbalance fiscal tightening.

Some commentators have savaged Europe s policymakers for not orchestrating as aggressive a fiscal and monetary policy as their US counterparts have.

That has been precisely the problem with the aggressive provision of liquidity, quantitative easing, and the reduction of central bank interest rates used to address the current crisis.

First of all, Bernanke did not propose any further easing of monetary policy to support the stalled recovery or, rather, the non recovery.

The monetary easing undertaken by the US Federal Reserve raised expectations for a devaluation of the US dollar that might help US exports.

Another round of so called quantitative easing by monetary authorities may not occur as inflation is rising albeit slowly in most advanced economies.

Monetary easing and fiscal stimulus, combined with structural measures to restore private firms to financial health, would stimulate household expenditure and business investment.

NEW YORK Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump start growth in today s anemic economies.

In the case of a financial crisis, this usually includes fiscal and monetary easing, as well as rescue operations for larger financial institutions.

Aggressive

First, the exit strategy from monetary and fiscal easing could be botched, because policymakers are damned if they do and damned if they don t.

The first option, a sharp weakening of the euro, is unlikely, as Germany is strong and the ECB is not aggressively easing monetary policy.

If anything, they claim, his fiscal stimulus, the bank bailouts, and US Federal Reserve Chairman Ben Bernanke s aggressive monetary policy made matters worse.

There is also ample scope for monetary easing unlike central banks in the West, the People s Bank of China has plenty of ammunition in reserve.

Anticipation of aggressive monetary expansion has sharply weakened the yen, which has fallen by almost 20 against the dollar in just over four months.

More monetary and credit easing is also required for the US Federal Reserve, the Bank of Japan, the Bank of England, and the Swiss National Bank.

But, with the BOJ joining the US Federal Reserve and the Bank of England in easing monetary policy, there will be upward pressure on the euro.

Easing monetary policy won t solve this kind of crisis, because even moderately lower interest rates cannot boost asset prices enough to restore the financial system to solvency.

Hard to be Easing