Lea Jakobiak
What do Google Glass, Titan Aerospace and Texas have in common? Tech expert, Stuart Miles, has the answer.
Article / 05 November 2012 at 12:15 GMT

Infographic: Quantitative Easing or Debt Monetisation?

Yusuf Yassin Yusuf Yassin
Editor / Saxo Capital Markets UK
United Kingdom

The US election this month has reignited the debate about the Federal Reserve’s role as a central bank and lender of last resort. Critics of the Fed have questioned whether the expansionary policies introduced by Fed chairman Ben Bernanke since 2008 have had any material effect on the recovery other than driving the country further into debt. Others argue that the Fed’s crisis response has been too slow – they point to unemployment levels that indicate the economy has a long way to go before output reaches its full potential.

To facilitate this discussion, Saxo Capital Markets UK has released an infographic outlining the Federal Reserve’s crisis response, as part of its new #FXdebates series. Click here to enlarge the image. 

USD Infographic


You are welcome to download the infographic and share it with your network. 

The US government issues Treasuries to finance its spending and the central bank purchases them with money it creates, leading to a higher supply of dollars in the system. In other words, the US government’s deficit is financed by printing dollars and the debt issued by the Treasury ends up in the hands of the Fed.

The Fed’s balance sheet keeps expanding - it has almost tripled in size since 2008 - and government borrowing costs have hit new lows. The Federal government’s debt is therefore cheaper and cheaper to service, meaning there is no incentive to pay it back, preventing the necessary adjustments in the economy. The increase in the money supply also risks spurring inflation and devaluing the USD.

There is also the question of who will be at Fed’s helm next year, as the departure of Ben Bernanke could have massive implications for USD.

For Saxo Capital Market UK’s full perspective on USD, join the #FXdebates here and download a free copy of Saxo Capital Market UK's new eBook.

Kay Xander Mellish Kay Xander Mellish
This is a very useful infographic - thank you for posting it!
Peter Garnry Peter Garnry
Nice chart. Remember Yusuf that Ben Bernanke has actually been able to convince most of the Board of Governors to do accept QE conditioned on inflation being below target ( So even if Romney wins, despite the probability is low, he has to change the whole Board of Governors to really be sure that a change in monetary policy will happen. And even so, remember that the staff members are the ones supplying the Board of Governors with data on the system and they will likely influence the new board with their in-house research. My point being that we should be careful not to put too much weight on political outcomes. In my view it is a mainstream media habit to make mean much.
Yusuf Yassin Yusuf Yassin
Thanks Peter. Yes, Bernanke certainly yields a lot of power at the Federal Reserve, and over the years his views have rubbed off on many people like Kocherlakota. However, this has happened over time and a more hawkish Fed chairman plus a switch in the rotating members on the FOMC (I'm looking at 2014 when both Fisher and Plosser get a vote, not to mention Kocherlakota, who may change his vote if core inflation rises.) There is also the question of whether Ben Bernanke even wants to stay on as the Fed chairman. Then politics may come into play.


The Saxo Bank Group provides an execution-only service and all information provided on is solely for general information. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. Saxo Bank Group will not be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available as part of the or as a result of the use of the Any information which could be construed as investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be considered as a marketing communication. Furthermore it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Please read our disclaimers:
- Notification on Non-Independent Investment Research
- Full disclaimer

Show latest activity
Sorry, there was a problem communicating with the servers. We are working hard to solve this. Please try again later.
Oops! There was a problem communicating with the OpenAPI Portfolio service.
Oops! There was a problem communicating with the OpenAPI History service.
Oops! There was a problem communicating with the OpenAPI Reference service.
Oops! There was a problem communicating with the OpenAPI Root service.
Oops! There was a problem communicating with the OpenAPI Trading service.
Sorry, there was a problem communicating with the Financial Calender servers. We are working hard to solve this. Please try again later.
Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail