In the past years, the Federal Reserve dropped many inflationary bombs on the markets. Inflationary in the purely monetary sense by supplying money in almost ridiculous amounts, especially base money figures. So why is the dollar thriving if in five years there is four times more of it? Why are inflation rates not four times higher than they were at times before the crises? If the money supply is being printed at such a pace, surely it should boost the prices, shouldn’t it?
Paper notes and coins are being spent in the market for sure. Yet the truth is that this money is created not with ink and paper, but by pressing the button and producing computer zeroes in electronic books and accounts. Here is where the trick begins and here is why this tremendous electronic printing did not cause either an inflationary spike, or a run away from the dollar.
See full story on resourceinvestor.com