The gov’t and fed have been injecting crazy amounts of printed money into the economy for the past decade or so, and many predicted that the deficit spending and quantitative easing would lead to terrible inflation. But it didn’t. So why not? Is it that the working class was only benefitted enough to keep afloat, and most of the new wealth went to the already wealthy? So injecting new currency never shifted the working class demand curve? What happened? Or am I completely wrong about my assumptions?
Most of it went idle. From the Federal Reserve:
Monetary Base: https://fred.stlouisfed.org/series/BOGMBASE
Excess Reserves: Excess Reserves of Depository Institutions (DISCONTINUED) (EXCSRESNS) | FRED | St. Louis Fed
The money isn’t being lent out by the banks, and so it isn’t making its way into general circulation. Weak demand and weakened balance sheets will do that.
Quite a bit has went into the stock market as well.
Printed money is the pocket change of the US economy. And it’s essentially meaningless if it never leaves the Fed.
I realize the OP specifically called out printed money, but perhaps is interested in general increases in money supply. If so, we might have a bit more to discuss.
+1. It will take another decade or so for the fed to sell all of the assets it currently owns but as it does, it will shrink the money supply. In the meantime, the supply will grow from other sources such as bank lending.
Well, he did put “printed” in quotes, so I figure he meant increasing the money supply.
Yep. People forget that you need more than an increase in the money supply to cause inflation. You need “velocity.” There is NOT currently a case of too much money chasing too few goods.