Due to low consumer spending and high unemployment, the Federal Reserve hesitated to stop quantitative easing in spite of current inflation. Covid-19 has increased life expenses and the incidence of covid-19 have reduced clients’ buying power. Millions of Americans still struggle to fulfill their basic needs, despite the decline in interest rates and increase in monetary circulation. The increased economic instability has resulted in more than 57,000 people being jobless, according to the Bureau of Labor Statistics. Many organizations have stopped operating due to low profit margins and high operating costs, especially small- and medium-sized ones. Despite the massive quantity of money flowing, quantitative easing promotes people’s access to lower loans, liquidity, and increased investment activity, hence promoting economic stability (Jackson & Curry, 2022). Quantitative easing reduces market pressure by increasing the flow of money in an economy. This allows businesses to make more revenue and consumers to purchase necessary goods.
The end of quantitative easing would make it difficult to access financial resources like loans. Investors will be discouraged from continuing their operations. The result would also reveal the millions of Americans whose non-sustainable lifestyles receive assistance from government. Businesses that operate below the minimum standards will result in higher unemployment and a decrease in their ability to sustain themselves. Also, termination could reduce liquidity rates which would mean that less consumers have money to buy or disposable income (Hanssen and al., 2002). In order to stimulate business activity, the Federal government applies qualitative easing. This is a way for the government to create a balanced between the economy’s monetary demand and supply. But, it is important that the Federal Reserve takes proactive steps to make sure the infusion of money does not lead to currency volatility or depreciation.
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