Easy Money

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DEFINITION of 'Easy Money'

In the most literal sense, money that is easily acquired. Academically speaking, the term specifically denotes a condition in the money supply. Easy money occurs when the Federal Reserve allows cash flow to build up within the banking system. This lowers interest rates and makes it easier for banks and lenders to loan money. Money is therefore easily acquired by borrowers.

BREAKING DOWN 'Easy Money'

The value of securities often initially rises during periods of easy money, when money is cheap. But if this trend continues long enough, it can eventually reverse due to fear of inflation. Easy money is also known as cheap money.

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