Hobbes is famous for his early and elaborate development of what has come to be known as âsocial contract theoryâ, the method of justifying political principles or arrangements by appeal to the agreement that would be made among suitably situated rational, free, and equal persons.
TODAY the European Central Bank (ECB) launches its long-awaited programme of quantitative easing (or QE), adding lots of public debt to the private kind it has already been buying. Its monthly purchases will rise from around â¬13 billion ($14 billion) to â¬60 billion until at least September 2016.
To carry out QE central banks create money by buying securities, such as government bonds, from banks, with electronic cash that did not exist before. The new money swells the size of bank reserves in the economy by the quantity of assets purchasedâhence quantitative easing. Like lowering interest rates, QE is supposed to stimulate the economy by encouraging banks to make more loans. The idea is that banks take the new money and buy assets to replace the ones they have sold to the central bank.