I heard somewhere that QE is not the same as printing money -- in fact as I know it, QE is the purchase of assets in exchange for more liquid and high-quality, better collaborated debt. In other words, it stimulates the exchange of liquid fiat, and indirectly increases the money supply in circulation (that is, money not in reserves) by inducing banks to lend, and therefore practice fractional reserve banking. So the analogy to "printing money" is a misnomer.
Is this explanation wrong?
It is correct that quantitative easing (QE) is not exactly the same as just printing money. However, I would hesitate to say equating it to printing money is complete misnomer (although its not accurate analogy either) and I also dont think that your description of QE is completely accurate.
QE actually begins with creation of new money. As explained by Fed St. Louis QE is defined as:
large-scale asset purchases—in the hundreds of billions of dollars range—of, for example, mortgage-backed securities and Treasury securities.
Moreover, this large-scale asset purchase is payed for by Fed creating new reserves. This creation of new reserves is in principle equivalent of actually physically printing out the bills even though it is done electronically.
The reason why the above should not be equated to just printing new money (as explained here in this VOX article) is that:
asset purchases by the central bank are financed by money creation, but not money in the form of bank notes. The money is in the form of reserves held at the central bank. That form of money is a liability of the public sector – taking the central bank and the government together in an expanded definition of the public sector. It is a liability that pays the interest rate set by the central bank.
The above is why QE can be considered an asset swap and why you can argue that the asset purchase just by itself is not money creation (although it indirectly encourages it) as it also reduces the money supply since Fed (or other central bank) is taking the money (in form of those bonds that can count as broad money) out of economy.
However, there is a caveat to this. The ultimate purpose of QE is to increase money supply which also happens when you print new money. The QE, if successful, does de facto increase the money supply when it encourages more lending. Even if the original swap of reserves for bonds might leave broad money supply unchanged the additional lending will increase it.
Thus this is essentially an argument about proper nomenclature/semantics. For example, lets say that in certain situation we know that if central bank would lower the interest rate by some percentage the corresponding increase in lending would make money supply expand by $\\\$ 1000$ and we know we could also do that directly by just printing out the $\\\$ 100$ bill which through multiplier (assuming $10\%$ reserve ratio) would also expand the money supply by $\\\$1000$. Hence, is it valid to call cutting interest rate printing money? Well certainly from narrow scientific semantic point of view that would be a misnomer as it would not follow proper economic nomenclature that makes distinction between the two actions. But this being said, since those actions would have equivalent effect I would not say that using such analogy is completely incorrect.
On a certain level this really is just an English language/semantics problem - If you go somewhere and later realize that you have to turn back and backtrack to the same spot would saying; 'well that is the same as staying still,' be a good analogy or a misnomer? The actions have different implications in terms of effort etc. yet in both cases outcome is the same. Moreover, before turning to economics I used to study physics which abounds with analogies that are far more outrageous yet commonly used in classroom (see this rant).
Hence to sum up, while calling QE printing money is not completely proper, the analogy has some merit to it.
