Central Banks Around the World Saving the World One Country at a Time (Anytime Now)

I think this is how it works.

1. The economies of the world have problems (housing and financial crises).
2. Economies do better when people spend more (companies earn more and hire more).
3. People don't feel good right now so they don't spend.  Things that make them feel good are rising housing values and stock prices.
4. Governments spend money they don't have to encourage people to spend.
5. They manipulate interest rates (through buying their own debt) so that people can borrow money and spend it on houses, stocks, businesses, and so on.
6. People spend more.
7. The economy grows.
8. Unfortunately, banks' lending standards have increased and the people who want to borrow money, can't.
9. What does that leave?  Government banks with gigantic balance sheets, people not able to borrow, people worried about losing their jobs and not being able to retire, people saving more and not buying jet skis and 60" TVs...
10. So government banks spend more money they don't have to encourage people to spend...

Q: What happens when you have a mountain of debt and have reached your credit limit?
A: Ask your credit card company to increase the limit, of course.

What, you thought China's ghost towns, millions of miles of infrastructure, and subsidies to various industries (such as solar) enabling Chinese firms to undercut prices from cross-border competitors was by luck?

Source: http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/