Mind boggling doesnt quite reach it ... 1.7 Trn in monetization is a pretty big wad. I guess (almost) everyone in the market is eyeballing how much theyll extend it to in their QE: the sequel. Anyway, until they stop "monetizing" huge sums of mbs on a weekly basis ( sep 3 to 9 : 18 Bn ) we will have more of what we are having ... the best nominal index recovery in the face of the worse economic recovery
The banks are lending. They're lending to participants in the stock market who are driving it up, thus, eventually, making equity financing less expensive for businesses that want to grow. If the stock market had a reasonable P/E ratio for the past decade, ie: something like 25, you would have seen many new and productive businesses created, instead of money being dumped into real estate. Business owners re-invest their profits typically (hence, dividend rates are relatively low). Real estate owners, ie: the average joe sixpack, consumes any RE profits on useless junk from China. The only reason the RE bubble was able to inflate, anyways, was that nobody had any confidence in the stock market, or in business ownership more broadly, so they invested in RE, and in the debt of RE companies. Trust me, if the P/E of the markets (based on 5-year trailing earnings) is pumped up to 40-50 (ie: Dow 36,000!) -- you'll see lots of new and useful businesses created. IPO's will become alive again. Business owners will feel 'rich', and will start sharing some of the wealth, competing for the best and brightest college grads to grow their businesses even further. Overly tight business credit, and overly loose consumer credit is the huge problem here. It will be at least a decade before 'consumer' lending comes back -- but properly capitalized businesses, with sustainable business models, right now, can borrow at <1% right now, with ease, and are just cleaning up.
"Hyperinflation" LOL....good grief what is it with you people. On one hand we have the deflation the end is nigh crowd. And now that it's becoming most obvious (to most) that the U.S. is fighting its way out of Recession the hyperinflation crowd gains a voice. Is there a contest of which I'm not aware that pays off on the "greatest most asinine headline?"
All this inflation talk really assumes a robust global recovery. You're premature (at best). You're far, far worse (at worst).
In your scenario, wouldn't prices have to come down? If workers pay can't keep up, how can they maintain the same level of buying? Less buying, less demand, prices would come down, no?
If you think, economics is the only driving force for inflation, you have no idea. Imagine the following scenario: - GDP, lending slowly begins to recover - CPI/PPI rise - Central Banks around the globe now would need to raise rates. But guess, they will not. They will keep rates at zero levels for years, no matter what the economy does, in order not to endanger fiscal stability for the government(s). This alone will spur an inflation spiral.