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Federal Reserve Chairman Janet Yellen (AP Photo/Michael Dwyer, File)Michael Dwyer/The Associated Press

This week, six years after it started to take radical steps to try to turn the tide on the worst economic downturn since the Great Depression, the world's most powerful central bank, the U.S. Federal Reserve, brought an end to its program of asset purchases known as quantitative easing or QE. So did QE work? Did it, and all the other conventional and unconventional measures taken by central banks in Europe, Japan, the U.S. and Canada, revive the economy? Is the global recession of 2008-09 officially over?

The answer is yes. And the answer is no.

Yes, QE, along with other desperate measures taken by central bankers, were essential in allowing the global economy to avoid catastrophe. Dramatically lowering short-term interest rates, pledging to keep them low for years, and under QE buying trillions of dollars worth of bonds to push down long-term borrowing costs all had an impact. Every stock market investor has felt it; on Friday, the Dow Jones Industrial Average hit an all-time high. Every borrower has experienced it: mortgage rates have never been lower. And partly as a result, the Canadian economy is, relatively speaking, in pretty good shape.

But no, QE and its policy siblings didn't entirely heal the global economy. Six years on, the recession isn't over in much of the world. The medicine prevented the patient's death, but it hasn't yet cured him.

Critics feared that QE, combined with central bank promises to keep interest rates low for years, would spark inflation. The critics were wrong: in a world suffering from a lack of demand, lowering the cost of borrowing hasn't sparked inflation. In fact, in much of the world the problem isn't inflation – it's the lack of it. Central banks have been desperately trying to get inflation back up to 2 per cent, as a sign that economies are growing and not stagnating. The Bank of Canada is making progress. So is the Fed. Europe and Japan are still basket cases.

The fairest criticism of the world's central banks is not that they have done too much. It is that they have done too little, or have been able to do too little. In the U.S. and Europe, governments have often been cutting back spending and thereby further depressing an already moribund economy. The idea of reducing deficits is always popular with conservative parties, but there are times, such as in a recession, when it makes no sense. It's like finding a patient with low blood pressure – and prescribing a pill to lower his blood pressure some more.

Canada has been the best performer among the developed world's major economies – due to a combination of good policy and good luck. We didn't have a housing price collapse. There was no banking crisis. Our recession wasn't as destructive as the American downturn. To stimulate the economy, our central bank lowered interest rates and signaled that it would keep them there for a long time, so that borrowing costs have for several years been cheaper than at any time in history. And in 2008, a Conservative government in Ottawa did the right thing economically, even if it didn't square with its ideology: it agreed to temporarily ramp up spending and run big deficits, thereby further stimulating the economy. Canada needed the combined push of low interest rates making people feel richer and more government spending putting cash into people's pockets. Combined with a rebound in international demand for commodities such as oil, Canada ended up having a relatively shallow and short recession.

Things haven't gone so smoothly in the rest of the world. For many Canadians, particularly those living in near-zero unemployment Alberta and Saskatchewan, it's hard to get a sense of how depressed the global economy still is. Even in central Canada, the recession isn't quite over, with former powerhouse Ontario still suffering from an unemployment rate of 7.1 per cent.

And Ontario is in better shape than the U.S. – where the headline jobless number may be lower, but the true picture of the job market is darker. Millions of working-age Americans have simply dropped out of the labour force. The U.S. is still recovering, not recovered, from the Great Recession. That's why, even as the Fed stopped buying new assets under the QE program this week, it continued to promise that its benchmark interest rate would remain at a record low of near zero "for a considerable time."

And the U.S. is in much better shape than Europe. In the summer of 2012, European Central Bank head Mario Draghi said he would do whatever was necessary to save the Eurozone, prevent a collapse of the banking system and avert a catastrophic debt default by sovereign countries – notably the so-called PIGS, Portugal, Italy, Greece and Spain. Disaster loomed. Mr. Draghi's words and his deeds worked. The ECB staved off catastrophe.

But half a decade after the recession supposedly ended, the Eurozone's unemployment rate is still 11.5 per cent. In Italy, the jobless rate is 12 per cent – with 42 per cent unemployment among those under the age of 25. In Spain, there's 24 per cent unemployment and 54 per cent unemployment for youth. In some parts of the continent, it might as well be the Great Depression.

And then there's Japan. On Friday, Japan's central bank, which has failed to make enough progress against a slow-motion depression that began in the 1990s, announced a surprise expansion of asset purchases under its own long-standing QE program. The Japanese stock market immediately jumped. Japan's QE program sparked a recovery more than a year ago – but recovery was then knocked off course by a government that prematurely tried to lower its deficit by raising taxes.

Six years on, the world may finally be getting lucky: the long-awaited U.S. recovery may be sustainable, and that may help pull Europe and Japan out of the ditch over the next few years. Or sharper measures may be needed. At this point, it's looking like the latter.

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