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. Ben Bernanke

    The chairman of the board of governors of the U.S. Federal Reserve. ...
  4. Earnest Money

    A deposit made to a seller showing the buyer's good faith in ...
  5. Neutrality Of Money

    An economic theory that states that changes in the aggregate ...
  6. Bank

    A financial institution licensed as a receiver of deposits. There ...
Related Articles
  1. Insurance

    The Rise Of The Modern Investment Bank ...

  2. Credit & Loans

    The Evolution Of Banking

  3. Professionals

    Wanna Be A Bigwig? Try Investment Banking

  4. Budgeting

    When Good People Write Bad Checks

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center