QE1 stands for
Quantitative Easing round/phase 1. The Wall Street Bailout. The stock market is falling. Sometime during the summer and early fall of 2008 the free hand of the market got burned. It stuck its hand into "complicated financial instruments that only a few people in the world understand" and got badly burned. The US Central Bank rushed in with socialized burn cream and handed its money to those in need (arguably, no doubt).
QE2 stands for
Quantitative Easing round/phase 2. Right after Halloween in 2010 the US Federal Reserve decided that the US economy was not growing fast enough. It was growing... but not fast enough. Unemployment was over 9%, a few hundred banks had failed since 2008, the price of gold had soared, homeowners were underwater. Things were ok, but the Fed decided to give the recovery a little boost. So, they bought
US Treasury Bonds (T-Bonds). Lots of them. And unlike QE1, QE2 didn't have any specific goal in mind, which means that yes - it was a success...
QE3 stands for
Quantitative Easing round/phase 3, which is rumoured to take place after QE2, if situationally needed. Well, as of July 2011, nobody knows for sure what exactly QE3 means yet. Maybe the Federal Reserve will buy more
US Treasury Bills (T-Bills). Or maybe they will bailout banks again like in QE1. Or maybe the Fed will..., oh what the hell. Nobody expects the US will ever pay back $14 trillion. So, go ahead raise the debt ceiling. What's another trillion or two? Go ahead S&P - downgrade our credit rating.
QE3 will work, you'll see!
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