Key Figures Behind Quantitative Easing

Milton Friedman (1912-2006) and Anna Schwartz (1915-2012)

Their A Monetary History of the United States, 1867-1960, published in 1963, argued that the Great Depression was made far worse by the Federal Reserve allowing the money stock to contract by roughly a third as banks failed. That interpretation reframed the Depression as a monetary policy failure rather than an inevitable consequence of a market crash, and it convinced a generation of economists that a central bank facing deflation must act aggressively to expand the money supply. At a 2002 event honouring Friedman's ninetieth birthday, Ben Bernanke — then a Fed governor — publicly accepted the argument on the institution's behalf and promised that the Fed would not repeat the error. Six years later he had the opportunity to prove it.

Richard Werner (born 1967)

A German economist working on Japan who introduced the phrase that became quantitative easing in the Japanese policy debate of the mid-1990s, as the country's banking system foundered and conventional rate cuts ran out of room. Werner's original proposal concentrated on expanding bank credit creation to the real economy rather than simply enlarging bank reserves, and he has since argued that the policies central banks actually adopted under that name differ from what he intended. The distinction matters for understanding the criticism of QE: enlarging the quantity of reserves in the banking system does not by itself guarantee that new lending reaches households and businesses.

Ben Bernanke (born 1953)

Chair of the Federal Reserve from 2006 to 2014 and the central figure in the design of American quantitative easing. His academic work on the Great Depression and on the credit channel of monetary policy, and a widely read 2002 speech on how a central bank could still act after rates reached zero, gave him a worked-out plan before the crisis arrived. Bernanke preferred the term credit easing for the Fed's programmes, emphasising that the composition of assets purchased mattered, not merely the quantity of reserves created. He shared the Nobel Memorial Prize in Economic Sciences in 2022 for research on banks and financial crises, work he had done long before he was asked to apply it.

Janet Yellen (born 1946)

Vice chair during the later crisis-era purchase programmes and chair from 2014 to 2018, Yellen inherited the harder half of the problem: how to stop. She oversaw the completion of the taper in October 2014, the first rate increase in nearly a decade in December 2015, and the launch in October 2017 of the first balance sheet runoff in Fed history. Her design choice — passive, capped, pre-announced runoff of maturing securities rather than active sales — was deliberately undramatic, intended to keep the balance sheet in the background while the policy rate did the work of signalling. That template was reused when the Fed began shrinking its holdings again in 2022.

Jerome Powell (born 1953)

Chair from February 2018, Powell led the fastest and largest asset purchase programme in Federal Reserve history when Treasury and mortgage markets seized in March 2020. Within roughly two weeks the committee moved from a fixed dollar amount to an open-ended commitment to buy whatever was necessary to restore market function, and the Fed simultaneously stood up a series of emergency lending facilities backed by Treasury capital. Powell was notably explicit that the initial purchases were about market functioning rather than stimulus, a distinction that faded as the programme continued through 2021. He then presided over the wind-down of purchases and the start of a second round of balance sheet reduction in 2022.