This was their first Quantitative Easing (QE) program. This was a classic and critical step in managing a deleveraging. Central bankers in the midst of crises are forced to choose between 1) “printing” more money (beyond what’s needed for bank liquidity) to replace the decline in private credit, and 2) allowing a big tightening as credit collapses. They inevitably choose to print, as they did in this case, which is when things changed dramatically.
