QE is the tool used to stimulate the economy when standard
monetary policy becomes ineffective. In QE, there is the purchase
of large financial assets from commercial banks and financial
institutions. This increases price of assets, decreases the yield
of assets and increases money supply in the economy.
It encourages lending, borrowing, and spending. Thus aggregate
demand increases and the economy comes out of recession. It reduces
interest rate as money supply increases. This also increases
employment via an increase in production. it increases bank
reserves
QE increases public debt and inflation. QE benefits those on
the higher spectrum of income and banks. It hurts salaried and wage
earners. It hurts prudent people who fear heavy public debt. It
hurts investors in the mortgage as the yield decreases on
them.