Somewhere between 2008 and 2014, through three installations of QE, the Fed purchased about $3.2 trillion of government, mortgage-backed, and agency securities in return for excess banking reserves. Thesc excess reserves enabled banks to broaden a higher number of loans than would otherwise be possible. In doing as such, not only did economic activity expand, the money supply rose. Attempting to evaluate the measure of improvement offered by QE isn’t simple. In 201 1, Fed Chairman Bernanke gave a fundamental rule to enable us to change a dollar measure of QE into an interest rate equivalent. Bernanke proposed that each extra $6.6 to $10 billion of excess reserves, the side-effect of QE, has the impact of bringing down interest rates by 0.01 %. In this manner, every trillion dollars of excess reserves holds is identical to bringing down interest rates by 1 .00% to 1 .50% as Bernanke would see it. The diagram underneath totals the two types of monetary stimulus (Fed Funds and QE) to measure how much effective interest rates are beneath the rate of economic growth. The blue zone utilizes the Fed Funds — GDP data, the orange territor representing QE based on Bernanke’s equation.