MP2 (post-2008): central bank directly monetizes debt — buys government bonds with newly created money. This is quantitative easing. It bypasses the interest rate channel and works directly on the quantity of money/credit.
MP2 (post-2008): central bank directly monetizes debt — buys government bonds with newly created money. This is quantitative easing. It bypasses the interest rate channel and works directly on the quantity of money/credit.