This is CBS I on the world with John Bachelor.

Here's John Bachelor.

I welcome Joseph Sternberg, member of the editorial board of the Wall Street Journal.

He's in London, he's based in London.

He writes political economics and a recent column reminded me back to the future of the

great recession of 2008 to 2010 and how the Federal Reserve responded to what was a panic in the marketplace at the time.

There was a moment when even the money markets were not going to hold up to the wave of fear, people trying to get out of one door, all the markets

trying to get out of one door because the market was crashing.

Joe, a very good evening to you, thank you for this. Your column about the Federal Reserve takes us back to the moment when I first heard the term quantitative easing. What is that, Joe? What do we remember? What is it now? Good evening to you.

Hey John. Yeah, so we're starting this evening's walk down memory lane by going back to the

immediate aftermath of the 2008 global financial panic and one of the new policies

that Central Banks attempted was the what they called quantitative easing. The idea was that they would buy huge quantities of assets, usually government bonds and other things in the U.S. it was mortgage bank securities.

And the purpose of doing this is that if the Fed was buying these assets, they would be releasing more money into the economy.

And this would, well, what it would do depended on whom you asked and when you asked them

because there were always various theories about the effect that this policy would have.

But the real consequence of this is that Central Banks, which had started before the 2008 panic, with relatively small balance sheets, suddenly had huge balance

sheets because they were accumulating hundreds of billions of dollars

worth of assets in some cases.

And so what this has done is turn central banks into a form of asset manager

because now they have all of these financial assets on their portfolio.

And that means that like any other asset manager, they are now actually capable of losing money if some of the assets on the balance sheet lose value.

And so that's actually kind of where we are right now,

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