The potential "tapering" of quantitative easing can be likened to a lessening of chemotherapy treatments when a cancer patient's symptoms change. It means one thing if the patient is being cured. It means something quite radically different when there has not been a cure, and the underlying cancer remains as bad as ever.
We are told that quantitative easing (QE), a.k.a. "cheap money", exists for the purpose of stimulating economic growth and corporate profits, and is thereby helping the United States and other nations that are struggling with persistent and deep-rooted economic and unemployment problems. If this were the whole truth, then QE is a temporary and technical fix, a mere "accommodative policy" that can be stepped down and then eliminated altogether once markets improve and economies no longer need assistance.
This common narrative is dangerously mistaken, however, because the primary purpose behind the strategy is something else altogether: quantitative easing started as and remains a defensive attempt to prevent what could otherwise very quickly become an annihilation scenario for global financial markets.
Quantitative easing started revolutionizing the US financial markets in 2008 (QE1), with the emergency creation of more than $800 billion in new money out of the nothingness to stop an institutional bank run already in progress, that was within days or weeks of annihilating both Wall Street and the European banking system. ...