Tuesday, March 17, 2009

"Quantitative easing" is a weasel word

Governments should speak more plainly, says David Champion in "Bankers Turn to Weasel Words as a Desperate Measure." 

As an example of what not to do, he cites the Bank of England's references to "quantitative easing." Quantitative easing is fancy talk for increasing the money supply.

Campion says, "I cannot help but feel that a term like quantitative easing is designed to obscure a rational discussion around policy. If the Bank of England were to come out and simply say that all it could do to get us out of the crisis was print new money, then we might all feel that we had to sit down and think of something more sensible to do."

Are you using terms like quantitative easing in your investment commentary? If so, you run the risk that your readers, like Champion, will think you're trying to pull the wool over their eyes.

By the way, there's a decent explanation of quantitative easing at "Quantitative easing explained" on FT.com.




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Susan B. Weiner, CFA
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Copyright 2009 by Susan B. Weiner All rights reserved

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