cheap money

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Cheap Money

A monetary policy in which a central bank sets low interest rates so that credit is easily attainable. This makes borrowing easy for business, which stimulates investment and expansion of operations. The immediate result of cheap money is a boost in stock prices; in the medium term, cheap money promotes economic growth. However, if cheap money remains in the economy for too long, it can lead to a situation in which there is a glut of currency or too many dollars chasing too few goods and services leading to inflation. For this reason, most central banks alternate between policies of cheap money and tight money in varying degrees to encourage growth while keeping inflation under control.

cheap money

cheap money

a government policy whereby the CENTRAL BANK is authorized to purchase government BONDS on the open market to facilitate an increase in the MONEY SUPPLY (see MONETARY POLICY).

The increase in money supply serves to reduce INTEREST RATES, which encourages INVESTMENT because previously unprofitable investments now become profitable as a result of the reduced cost of borrowing (see MARGINAL EFFICIENCY OF CAPITAL/INVESTMENT).

Cheap money policy, through MONEY SUPPLY/SPENDING LINKAGES, increases AGGREGATE DEMAND. Compare TIGHT MONEY. See LIQUIDITY TRAP.

References in classic literature ?
They ferry over this LETHEAN Sound Both to and fro, thir sorrow to augment, And wish and struggle, as they pass, to reach The tempting stream, with one small drop to loose In sweet forgetfulness all pain and woe, All in one moment, and so neer the brink; But fate withstands, and to oppose th' attempt MEDUSA with GORGONIAN terror guards The Ford, and of it self the water flies All taste of living wight, as once it fled The lip of TANTALUS.
She op'nd, but to shut Excel'd her power; the Gates wide op'n stood, That with extended wings a Bannerd Host Under spread Ensigns marching might pass through With Horse and Chariots rankt in loose array; So wide they stood, and like a Furnace mouth Cast forth redounding smoak and ruddy flame.
When the workmen found it was impossible for me to break loose, they cut all the strings that bound me; whereupon I rose up, with as melancholy a disposition as ever I had in my life.
With a wrench I tore it loose, and standing upright in the wobbly log drove it with all the strength of my two arms straight into the gaping jaws of the hydrophidian.
But the Scoodlers closed up in front, as if to bar their way, and so the shaggy man stooped down and picked up a loose stone, which he threw at the creatures to scare them from the path.
When this shower of arrows was over, I fell a-groaning with grief and pain, and then striving again to get loose, they discharged another volley larger than the first, and some of them attempted with spears to stick me in the sides, but, by good luck, I had on a buff jerkin, which they could not pierce.
It reminded me so strong of the First Mate tearing loose as soon as I begin to fiddle that I come nearer to laughing out loud in church than I ever did before or since.
In such a loose, dry, stony soil, the climate of the intertropical regions alone could produce a vigorous vegetation.
And when his other lusts, amid clouds of incense and perfumes and garlands and wines, and all the pleasures of a dissolute life, now let loose, come buzzing around him, nourishing to the utmost the sting of desire which they implant in his drone-like nature, then at last this lord of the soul, having Madness for the captain of his guard, breaks out into a frenzy: and if he finds in himself any good opinions or appetites in process of formation, and there is in him any sense of shame remaining, to these better principles he puts an end, and casts them forth until he has purged away temperance and brought in madness to the full.
I will read the inventory," began Craven gravely, picking up one of the papers, "the inventory of what we found loose and unexplained in the castle.
Expect all hell to break loose," he cautioned me, "but don't mind it.
The girl rowed, pulling a pair of sculls very easily; the man, with the rudder-lines slack in his hands, and his hands loose in his waistband, kept an eager look out.