Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown, 4th Edition

CHAPTER 5 Massive Money Printing Will Eventually Cause Dangerous Inflation—So Why Hasn’t It Happened Yet?

“Inflation is always and everywhere a monetary phenomenon.”

—Milton Friedman, Nobel Prize–winning expert on monetary theory

We know what you’re thinking. We’ve been warning for years that massive money printing will cause rising inflation that will push interest rates up and bring the multibubble economy down.

So where’s the inflation?

Even though the Fed has expanded the money supply by more than 400 percent since 2008, inflation remains low. If money printing really is so dangerous, shouldn’t we have more inflation by now?

We agree; it’s weird. But there are real reasons behind the current lack of significant inflation. This chapter gives you our latest thinking on why more inflation hasn’t happened yet. It also explains how the Fed’s money printing medicine will later become a poison, bringing on high inflation and high interest rates that will bring on the Aftershock.

But before we explain where inflation is hiding and why future inflation cannot be avoided, please allow us to provide a little clarity about what inflation actually is. We know that reading about inflation, interest rates, lag factors, and the like can be a bit dry. However, give us a chance to tell you what you need to know about inflation, and we promise by the end of this chapter, you’ll understand more about the real dangers ahead than do most economists!

What Is Inflation?

There is considerable ...