That's definitely a good point, but even a madman with a printer counts as 'supply outweighing demand'. The principles don't really change. That's why printing all this money is going to catch up with us sooner or later.
>That's why printing all this money is going to catch up with us sooner or later.
In 2009, here on HN, people were warning that the first round of QE would lead to Weimar-style hyperinflation in fairly short order. Six years and two additional rounds of QE later, interest rates and inflation in the U.S. are still quite low.
People tend to forget that the economy has done quite well even under inflation levels that we'd now consider high; during the Reagan boom, inflation fluctuated between 3-5%. Even if all this QE led to 5% inflation for a number of years, that's not really a serious problem (and certainly not hyperinflation).
It starts to get painful when you get to 10%, 15%, 20%, but that's a fixable problem. Indeed, it was fixed at the end of the 1970s. It was painful, but it was fixed.
So, yes, it might catch up with us. But when and how badly matter a lot. If the cost of all this QE is that average inflation in the 2020s is 5%, so what? That's hardly a disaster. Or let's say inflation creeps up to about 12%, and in 2025 the Fed takes strong action to get it under control, leading to a sharp painful recession in 2025-26. Should we have a decade or two's worth of stagnation to avoid this hypothetical? I personally don't think so.
Maybe but it's central banks being to timid in printing money, making it too valuable and increasing the demand for it that ends up making them print much more just to barely keep the economy going. They are making fiat so valuable that it displaces private investment as a store of value and money accumulates in the economy as idle excess reserves.
If central banks had printed sufficiently and promised to push inflation high enough early in the financial crisis, the market would have cleared and much less money would have accumulated idle in the system overall.
