QE3 stands from the third round of Quantitative Easing from the US federal Reserve. Under the programme the Federal will purchase $40 billion of mortgage dept every month. QE is designed to increase bank reserves and the demand loans; as the name implies, QE 3 is not the first iteration of quantitative easing by the Fed. Even though QE is designed to increase the demand for loans and reduces their yield and help reduce interest rates across the board, there are still downsides to QU programs. According to Elementary economics, an increase in money supply leads to inflation. The inflation is an indicator for our economy; if the QE3 should be efficiently help the economy by reducing the inflation rate but focus on creating money out of thin air.
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