QE I, II, & III are about reducing debt through inflation, by printing money (open-endedly with QE III).
Federal Reserve Chairman Ben Bernanke made this clear last week, telling reporters that the bond-buying program "should increase the downward pressure on long-term interest rates more generally, but also on mortgage rates specifically, which should provide further support to the housing sector by encouraging home purchases and refinancing."
This economic strategy is "encourage people to continue buying into the busted market to keep the bubble from deflating." Essentially we've acknowledged (not admitted--nobody ever denied it) that the housing market busted (collapsed, etc). The "support to the housing sector by encouraging home purchases" directly says "increase demand [i.e. encourage purchasing] for houses." If demand drops off, the prices must move down to bring demand up; essentially the total cost of a house is the amount paid--taxes, interest, sale price, PMI--and so increasing interest rates pushes up the total cost, meaning demand will drop unless home prices go down. Keeping interest rates low keeps home sale prices up.
Ahem...getting close to political there.
Yeah, the economics are fairly direct--this is Keynesian economics, not Democrat vs Republican--but the fact of the matter is the current administration is [perceived to be] run by Democrats and every action taken is [figureheaded] by Barrack Obama, so when we discuss abstract economics people will jump behind their respective party lines to argue from.
The best part is when it swaps around--when the Republicans start doing it--the arguments reverse entirely. As I said, the economics are fairly direct and separated; America tends to follow a Keynesian economic policy, regardless of party. That is to say, we try to keep markets from busting and collapsing by pressing the right economic buttons to keep the boom going forever. The only policy difference is exactly how the Republicans propose to do exactly that versus how the Democrats propose to do exactly that.
Since these policies differ, people will ignore things like "The boom will always lead to the bust, trying to stop the bust is the wrong way to do it!" and go straight to "Well [my party] is doing it right and [your party] is full of idiots!"
That's the problem with politics: you can't discuss anything without hitting it. Can't buy beer on Sundays? Should these laws that mandate liquor stores close on Sundays be repealed? Suddenly we start talking about which political parties support blue laws, and then claim it's because of religious value systems, and somebody switches the word 'religion' out with 'superstition', and now we're discussing politics AND religion and suddenly the discussion is unproductive.
It's like Godwin's law, except with the POTUS.
