They have failed thus far and we don’t have forever. The end result of this “experiment” in monetary voodoo is destruction of the US’s credit around the world and massive devaluation of currency. Also, it does not necessarily have to inflate to devalue.
It is obvious they will not get inflation via increased debt creation. Defaults will be coming for years at record levels. Commercial and credit card debt are spiking now and another round or so of residential is coming. Which leads to more job loses and the cycle continues. The average consumer is maxed out or has bad credit. College grads have very little opportunity and boomers are working longer and don’t want more debt. Credit is still contracting to consumers and businesses with no end in site.
The only other way of inflating is buying treasuries, which the Chinese have repeatedly warned about. They have already been making moves to set up trading in other than dollars and started to buy less treasuries since last year. We used to have 16 international treasury buyers and now we have 6. They may have to crash the market to scare internal buyers back into the market if the trend continues. Which it looks like it will.
Also, this kind of inflating may not show up in wages if there is no job growth. Because job growth is linked directly do debt growth which is not coming back any time soon. It will show up in commodities if it does show up which will exacerbate the default problem to some extent. That is kind of extreme just to keep rates down for a shrinking pool of home buyers, IMO.
Factor in state and local governments budget shortfall compounded with collapsing tax receipts and you have to spike taxes or mass layoffs. Either one further sapping the consumer economy. The sad thing is ALL the governments have consistently calculated increased taxes via economic, hence all the downward revisions. You would think they have learned by now. They are still doing it.
