#ProjectCrypto 💸 2009–2016: The Rise of Quantitative Easing & the Liquidity Addiction 🏦📈
After the 2008 financial crisis, the Federal Reserve turned to an unorthodox tool: Quantitative Easing (QE) — buying trillions in government and mortgage-backed securities to inject liquidity into the economy.
💥 2009–2012: The QE Era Begins
The Fed rolled out QE1 and QE2, aiming to:
✅ Lower long-term interest rates
✅ Encourage borrowing, risk-taking, and spending
✅ Inflate asset prices to trigger a “wealth effect”
📈 Wall Street recovered fast.
Stocks, bonds, and real estate rallied as institutional investors chased yield in a near-zero interest rate world.
📉 Main Street lagged.
Unemployment stayed high, wage growth was weak, and wealth inequality deepened. QE propped up asset holders — but left everyday Americans behind.
💰 2013–2016: QE3 & the “Taper Tantrum”
In 2012, the Fed launched QE3 — dubbed “QE Infinity” — buying $85 billion/month without a set end date. This was peak Fed stimulus.
But in 2013, Chair Ben Bernanke merely hinted at reducing purchases—and markets panicked.
🔻 Bond yields spiked
🌍 Emerging markets saw capital flight
💸 Risk assets corrected
This became known as the Taper Tantrum, exposing how deeply markets had become addicted to Fed support.
⚖️ By 2015, the Fed ended QE and cautiously raised interest rates for the first time in nearly a decade.
Yet the message was clear:
🧠 The new normal was in place — markets now relied on Fed liquidity like a drug, with central bank policy becoming the most powerful force in finance.
📌 Takeaway:
QE saved the system — but rewired it.
It widened inequality, reshaped investor behavior, and laid the groundwork for crypto’s rise as an alternative to centralized monetary control.