This is a good, informative and educational youtube channel and a well-made video on the topic. More for the laymen, but still.
As is so common these days, fractional reserve banking in a low interest environment is confused with money "printing". Although it is true that by keeping interest rates low Central Banks can enable growth of what's popularly called the money supply -- more accurately the "money stock" of which M2 is the standard measure. Nothing happens, however, until someone walks into a bank and asks for a loan. In other words, the growth in M2 is dependent on demand for money. This has nothing to do with real "printing." M2 grows simply as a consequence of demand for credit and the miracle of fractional reserve banking which allows the same dollar to serve many, M2 is growing along with the velocity of money in economic booms. There is no "money printing" here. Printed money doesn't disappear in a poof the way credit money does when a loan is paid off. The only way printed money disappears is by Congress running budget surpluses. (I think we call that taxing more than we spend.) The Central bank does cause money to be "printed" but only so much as the Congress authorizes through deficit spending. Neither QE nor the regular adjustment of Bank Reserves that the Central Bank engages in is "money printing" despite what endless You Tube Videos and even the occasional Central Banker, who ought to know better, say. What the Central Bank does do is adjust the ratio of private sector money held in the form of Treasuries to that held in the form of Bank Reserves. This is not "printing", its just the swapping of one form of money for another. By law, only the Congress can print. It's in the Constitution folks! Milton Friedman said too much money chasing too few goods and services causes inflation. Although correct, were he alive today he might want to take those words back considering how much screwball economics his words engendered. If the Central bank was madly "printing" for a decade yet there was no inflation, then goods and services were also increasing at a mad pace. But the Central bank was not printing. And there was no excessive inflation despite Congress's hefty deficits, i.e., despite lots of printing. Obviously real printing, does not necessarily lead to inflation, and QE is certainly not printing. Real printing will only cause inflation if the deficit spending linked to it causes more demand for goods and services than the economy can accommodate without inflation. QE will only cause inflation if the low interest rates it causes result in excessive demand for credit beyond what the supply of goods and services can accommodate. What caused the current inflation is not Congress's money printing. And it certainly isn't mainly the Central bank holding rates too low too long, although in the minds of many, myself included, it did. Today's inflation is caused by supply-shock-initiated greed, i.e., good, old fashioned capitalism. The ideal way to handle it would be to increase supply. That's proving difficult, perhaps because we are shooting ourselves in the foot, or perhaps because we are not clever enough to figure out how to do it. In any case, the Central bank is going to do what they know how to do, and that's to put people on the unemployment lines. That will eventually bring down inflation so long as Congress does not replace 100% of their missing income with transfer payments, which would counter the Fed's effort. It will be the working class that feels the most pain. All discussions of money economics in the U.S. these days invariably includes mention of widening wealth disparity. Though Piketty in "Capital in the Twenty-First Century" gave convincing evidence that wealth disparity is a natural phenomenon endemic to all capitalist economies, the rate of disparity growth in the U.S. far exceeds that in the other capitalist democracies we regularly compare itself to. I view this disturbing trend as due to a breakdown in the progressive tax structure. We have endured an extreme compression of tax brackets beginning in the 1980s. If we don't correct this, we will lose our democracy --- in progress as I write this. On a related note, L.R. Wray observed, in his seminal, 1992 work, "Understanding Modern Money", that hyperinflation could often be traced to a breakdown in the tax system." No one likes to pay taxes but well managed tax policy turns out to be an essential component of a soundly managed economy. Deficit spending (money printing) is the way new, fiat money enters an economy, and taxation is the way excess money is removed. Taxation is balanced against money printing in well managed fiat-money economies. Both these components must be present in the proper ratio to maintain sound government finances without which democracy will be endangered. Needless to say, every thing comes down to competency in government. We need to choose our Representatives and Senators wisely.
I edited the long post above at 11 pm and went to bed. This morning I noticed two rough spots. 1. In the second sentence, first paragraph, delete "Although". The Sentence should read: It is true that by keeping interest rates low Central Banks can enable growth of what's popularly called the money supply -- more accurately, the "money stock", of which M2 is the standard measure. 2. In the next to the last paragraph, in the second sentence, replace "endemic to" with "inherent in" and "itself" with "ourselves". The sentence should read: Though Piketty in "Capital in the Twenty-First Century" gave convincing evidence that wealth disparity is a natural phenomenon inherent in all capitalist economies, the rate of disparity growth in the U.S. far exceeds that in the other capitalist democracies we regularly compare ourselves to.