Communication tools: a genealogy of quantitative easing

For most of the twenty-first century, the world’s largest central banks have been acquiring vast quantities of government debt. From the 1930s–1970s, identical operations formed the financial backbone of deficit-funded public sector expansion. In the latter twentieth-century, monetised deficit-support became anathema to models of central bank independence built on the dominance of monetary authorities over fiscal agencies and an inflation-targeting regime operationalised through interest-rate setting. Massive public debt acquisitions re-commenced in Japan in 2001 and then spread throughout the advanced economies. Those 'quantiative easing' (QE) policies were launched in the shadow of system-wide bank failures and fiscal stimulus programmes funded by historic public deficits. Central banks justified QE using a theoretic nomenclature which emphasised the private-market orientation of their policies and omitted any fiscal-supporting function. This article documents the development of the communication strategies used by two first-mover central banks, the Bank of Japan and the US Federal Reserve, to re-package and explain debt monetisation techniques as market-neutral inflation-targeting exercises. It compares the internal and external communications of those central banks during the launch of QE programmes to produce a genealogy which explains how and why the fiscal-supporting functions of public debt purchases were obscured in favour of private-market effects.