Quote from Specterx:
The important thing to realize about the Fed's actions is that simply pumping banks' excess reserves is very unlikely to cause inflation, because the printed cash is not entering the real economy, and in practice the presence or absence of excess reserves does not affect whether banks can make loans (this is affected purely by interest rates, set by the Fed). As long as QE just produces a massive pile of excess reserves, there is not going to be inflation and the "inflation trade" is just a run-of-the-mill speculative bubble, rather than a symptom of enduring dollar debasement. If credit starts expanding again then we can start worrying about currency debasement.
I disagree with you my friend, I explained this in depth in my previous journal. Just look at the numbers from QE1, $1.75T(IIRC) of assets bought, $1T in excess reserves by the end of it, this means $750B went out to 'circulate' in the economy, probably in the form of M2.
I dont have the numbers from QE2 yet but I wouldn't be surprised if it was similar given how healthy M2 growth has been. If someone has the numbers I would love to see