American trump card

On the screen of martial arts masters, there are always one or two strokes particularly powerful unique kungfu, each shot often invincible, this is the so-called "trump card." For example, Huang Fei-hung's Foshan no shadow Foot, Guo Jing 18 in the palm of the Shanlong have regrets, etc., are such. There are equally powerful similar tricks in financial policy.　　The United States, Britain, Switzerland and Japan and other countries to deal with the financial tsunami, the current "trump card" is the quantitative easing policy. QE is a special way for the central bank to loosen monetary policy when conventional tools such as rate cuts do not work.　　Comparing the day-to-day trading of short-term government bonds in the open market of central banks, the government bonds involved in QE are not only large in amount but also longer in duration. QE is often simplified as a printing bill. The central bank uses the money created to buy government bonds in the open market, to lend to depository institutions, or to buy so-called "toxic assets" from banks. All this has helped to lower the yields on government bonds and lower interbank lending rates, which have allowed banks to sit on large amounts of assets that can only earn very low interest.　　In this case, banks will be more willing to lend or invest in order to earn higher returns, thereby restoring liquidity in the market, recasting confidence and eventually achieving the goal of stimulating economic growth. But since the US and Britain have announced the adoption of quantitative easing, the yield on government bonds appears to have not been pulled down as expected, causing the market to question whether these policies are truly effective. Some analysts speculate that this may be due to market concerns about oversupply of government bonds and that inflation will return in the future. Another possible reason is the recent improvement in some of the leading economic indicators in Europe and the US, which could lead bond investors to expect the economy to recover.　　But whatever the reason, it seems that it is much harder to make QE effective. So what will be the impact on the return of different investment vehicles when QE finally comes into effect? In the first case, Morgan Asset Management believes that if QE succeeds, increases the supply of credit, avoids deflation and the economy recovers healthily, stocks will generally outperform bonds. In the second case, real assets such as gold, commodities and real estate are likely to perform better if the excessive use of QE leads to excessive supply of money and a resurgence of inflation. Third, traditional government bonds and other fixed-income instruments would be more attractive if QE failed to produce results and the economy plunged into deflation.