The stimulus economic package of President Barrack Obama was approved by Congress in February 2009. This package was calculated to stimulate economic growth and save up to 2.3 million jobs. As of October 30, 2009, 640,329 jobs had already been saved by this bill. The package was to be put into effect over the next ten years. An easy explanation of (Quantitative Easing) QE is that it is an irregular monetary policy that is put into effect by Central Banks to revive the economy by purchasing financial assets to inject a certain amount of money into the economy. This is quite different from the usual financial policy of dealing in government bonds to maintain interest at a specified level.
This has the effect of increasing the excess reserves of banks, and also increases the price of the financial assets that have been while at the same lowering their yields. For the package to have an immediate positive effect on the economy, 95% of this amount was to be utilized during the first three financial years. This would not increase the GDP, it was meant to make the economy healthier, even if the country was undergoing a recession. Advocates for this package maintain that the package performed better than expectations. By the end of the Financial Year 2009 (October 30, 2009) $241 billion had been utilized for unemployment and other benefits, for tax relief and for creating new employment opportunities.
President Obama’s package was meant to restore the self-assurance to stimulate real economic growth because it was evident that a financial policy was essentially required as the Monetary had done all it could and still more had to do with the growth of the economy. After assuming office, the President realized that the $190 billion that he had quoted during his election campaign was not nearly enough to revive economic growth and spectacular and forceful measures were the need of the hour to keep the economy from sliding further down.
Some essential mechanisms like enacting foreclosure freeze had already been put into effect, and other parts of the package such as abolishing taxes for senior citizens earning up to $50,000/- were still an essential component of this package. The incentives for small businesses did help to create jobs, reduce capital gains for small investors and increased loans from banks. But so many states were in such deep financial trouble that the Federal aid was not enough to cover their losses. The main purpose of this package was to reduce the impact of the recession