See, we haven’t printed anything. “QE” where the reserves created are immediately deposited with The Fed is a circle-jerk. There is no money-printing going on until and unless the reserves created enter the economy in some form. So long as they remain on deposit with The Fed it is simply a pass of a $20 bill from them to you and back to them – the net monetary impact is zilch.
Governments will find that they are unable to restrain themselves from printing ever more money in an endless wave of uncontrolled emission. At the same time, rising taxes, commodity prices, and costs of all kinds, coupled with a rising overall level of uncertainty and disruption, will curtail economic activity to a point where little of that money will still circulate. Inflationists and deflationists will endlessly debate whether this should be called inflation or deflation, unconsciously emulating the big-endians and little-endians of Jonathan Swifts Gulliver’s Travels, who endlessly debated the proper end from which to eat a soft-boiled egg. The citizenry, their nest egg boiled down to the size of a dried pea, will not be particularly vexed by the question of exactly how they should try to eat it, and will regard the question as academic, if not idiotic.
