Technically, what happens is that the Federal Reserve buys treasuries from the government, adds them to its balance sheet, then makes an offsetting adjustment, essentially transferring newly created money to the government account. The government then issues cheques against that money.
This might as well be ‘printing money’. It increases the money supply beyond normal supply/demand.
In the past, ‘Quantitative Easing’ was largely used to shore up bank reserves, and didn’t necessarily flow into the economy other than that it allowed banks to lend more money. That’s also money creation, but it only happens if there are people who want to borrow the money. Under that kind of QE, the fed could just reverse the transfer as bank liquidity improves, and the money doesn’t really move. You could see that in the data from the 2008 crisis, where the volume of money increased because of QE, but at the same time the velocity of money declined, keeping the money supply relatively stable.
The difference this time is that the government took that money and helicopter-dropped it on the population. That was about the most inflationary thing they could possibly do, and it was done partially with that intent, only they thought they were preventing DEflation from the drop in demand due to the pandemic.
When you drop all that money on people to simply spend, it’s pretty much ‘printing money’.
It should be obvious that it’s complex, and not due to just one thing. Inflation is happening for a host of reasons, including supply chain issues, labor shortages, energy prices skyrocketing, food going up for a number of reasons, etc. But monetary expansion is a big part of it. And yes, it’s global, but that’s because pretty much every government did the same spending with borrowed money.
Here’s a chart of the M2 momey supply since 2000. It’s supposed to grow with GDP growth plus enough to keep inflation mildly positive. Have a look at what happened in 2020 and after.
Right now, interest rates at 2.5% are expansionary when inflation is 9.1%. Deficit spending of the levels that have been going on is also inflationary, because there are no lenders for the amount of money being borrowed and the Fed has to provide it.
I’m not going to tell you exactly how much of our current inflation is due to X or Y. No one knows, as so many things have been changing and it’s a complex world.
We also don’t know how long it will last. But basic monetary theory suggests that the massive monetary expansion that’s gone on in the last two years is playing a big part, and it will continue to have an inflationary effect until the money supply shrinks back down to a realistic number - probably through a steep recession plus even higher interest rates. You could still have inflation after that, but it would be due to other factors like supply chain issues or a drop in productivity.
In other words, go begging to Saudi Arabia for oil. He owns this inflation mess.