[nakedshorts]

One year ago, if you had asked me what would happen if we printed $4T+ (that's 20% of GDP for perspective) out of thin air and injected it into the economy, I would've told you massive hyperinflation and immediate collapse of the dollar.

Instead, we see the US Dollar Index strengthening over the last 6 months [1]. The dominance of the United States as a global hegemonic superpower truly cannot be overstated; I'm in awe. We can literally print trillions of dollars worth of fiat and people around the world will give us real assets for it. Not only that, they will give us real assets at better rates than before we ramped up the printing presses. Makes me feel pretty good about the future, to be completely honest.

[1] https://www.marketwatch.com/investing/index/dxy

[grey-area]

Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east.

This policy does cause real suffering, and some would argue never really normalised the economy or led to growth for most of the economy.

[mancerayder]

Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east.

I'd love to read about the thesis/explanation you just outlined. Do you have a link or two on the specific topic of competitive devaluation v inflationary challenges and the global conflicts?

[ganeshkrishnan]

Printing money hasn't caused inflation since world war 1 and that's because the demand for USD is virtually unlimited. As long as the money printed comes back to the government as taxes, it's not an issue. Else it becomes a deficit. This was already theorized by modern money mechanics and this incident is proving it right

[mywittyname]

QE has led to inflation, but it's lead to the good kind of inflation: increases in stock and real estate prices; and not to the bad kind: increases in food and energy prices (for the USA, at least). A side-effect of QE is the decrease in bond yields, pushing capital into stocks and real estate, which furthers the goal of propping up asset prices.

I am worried that QE will eventually lead to a collapse in yields across the entire economy. QE is great at maintaining or increasing the price of assets, but unless the productivity underlying the asset continues to grow, then yields will continue a trend towards 0. It doesn't help that the people who benefit the most from QE, are also the those who never need to liquidate their assets. These investors are perfectly happy to watch the paper value of their assets explode while yields remain the same.

[mark_l_watson]

I agree with you, but...

eventually we will see a de-dollarization (there is a good book out with this name, which I recommend).

The thing that is really helping the USA now is that even countries that have been diligently working for de-dollarization do not want it to happen all at once. They want to slowly ease out of using the dollar for the reserve currency. I think that this may give us another decade of “owning” the reserve currency - that said, my friends correctly accuse me of over optimism, and I may be wrong about this.

[MattGaiser]

That and how QE is structured limits inflation. If inflation rises, you just put all the assets purchased back on the market.

[AnimalMuppet]

I saw the 1970s. We had 14% inflation. That came from somewhere.

[ganeshkrishnan]

It came from oil prices which had surge in pieces

[AnimalMuppet]

Not from trying to pay for both the Great Society and the Vietnam War, and so inflating the money supply?

You're mighty free with making blanket statements about what did and didn't cause inflation. Some actual data would make your statements much more persuasive. So far, you have given us no reason to think that you actually know anything about the causes of inflation.

[maedla]

I've been wondering what hyperinflation looks like in the 21st century. Just add some zeroes on our phone screens?