Along with many others, I expected that the great money printing binge that the US Federal Reserve kicked off in November 2008 to create massive inflation. As the Fed does, they came up with a great term to make it seem as if they knew what they were doing (Quantitative Easing, or QE for short, of which there have now been three programs, QE1 through QE3) and a rationale for it, based firmly in Keynesian economics: that triggering inflation would stimulate demand.
Those of us who consider classical (i.e. pre-Keynesian) economics to be a better depiction of reality took one look at this and either shook our heads sadly or laughed hysterically. Many of the classical (or Austrian economics) writers claimed this would inevitably lead to inflation, and probably hyper-inflation given the massive scale of the printing.
Why then have we not seen the prices of everyday goods spiralling upwards … Read the rest