I just came across a pretty good explanation of QE and QT, the two monetary policies that anyone following the market should understand.

So, what is QE? It’s simply when central banks pump money into the economy by purchasing financial assets, mainly government bonds. Doing so increases liquidity, lowers interest rates, and encourages people to borrow and invest more. As a result, stock markets often rise sharply, and the economy gets stimulated. QE is usually good for asset prices.

QT is the exact opposite. Central banks reduce liquidity by selling assets or simply not reinvesting. This pushes interest rates higher, slows down borrowing, and often puts pressure on the markets. QT can cool down the economy and reduce inflation.

The interesting part is that the Fed had been implementing a QT cycle for about 4 years prior. But since September last year, when they started cutting interest rates, the Fed has essentially shifted to QE. That’s a pretty optimistic signal for the market. Both policies have a profound impact on inflation, interest rates, and overall economic activity, so anyone interested in investing or crypto should keep an eye on these changes.