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Since 2008, the Fed has tripled the monetary base: why is there so little inflation?
Asked by Qingu (21185)
December 15th, 2011
Since the financial crisis started, the Fed has tripled the US monetary base—what some call “printing money.” Most of the increase happened at the start of the crisis. Then “quantative easing” last year further added money to the system.
However, inflation since 2008 has been modest. In 2008 we actually experienced a short bout of deflation. Earlier this year there was a somewhat large rise in commodity prices. Overall, however, inflation has not been more than 4%, and is basically in line with inflation rates during the 2000’s. (A rate between 2 and 4 percent is generally considered healthy for growth).
Why hasn’t tripling the monetary supply caused much more inflation?
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