Easy Money

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Policy Mix

    A government's combined use of fiscal policy and monetary policy ...
  3. Bank

    A financial institution licensed as a receiver of deposits. There ...
  4. Currency

    A generally accepted form of money, including coins and paper ...
  5. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  6. Money

    An officially-issued legal tender generally consisting of currency ...
Related Articles
  1. The Rise Of The Modern Investment Bank ...
    Insurance

    The Rise Of The Modern Investment Bank ...

  2. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  3. Wanna Be A Bigwig? Try Investment Banking
    Professionals

    Wanna Be A Bigwig? Try Investment Banking

  4. When Good People Write Bad Checks
    Budgeting

    When Good People Write Bad Checks

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center