Last week the relatively calm markets masked a proactive event. The Federal Reserve joined the Bank of England and the Bank of Japan with a plan to buy government debt. The measure adopted by the Fed and its counterparts in Japan and the U.K. are part of a series of tools known as "quantitative easing", because they tackle the quantity of money in the financial system rather than its cost, or interest rate. This approach is intended to boost economic activity by providing an abundance of nearly free money for lenders to tap, encouraging them to make more loans.

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