QE = future inflation? What?

Watch the somewhat longish video of Rick Santelli's rant...somewhere in between there, I think there was a guest that he was speaking to.



In one of his complaints, Rick's upset that because of QE, at some point in the next 30 years or so, when the Feds decide to unload their balance sheet of Treasuries, inflation will tick up.

Well, maybe.  For starters, the Feds could hold onto their Treasuries to the date of maturation, at which point they could opt to simply purchase new Treasuries.

But the odd thing about his rant, is that the flood purchases of Treasuries by the Feds, was supposed to result in near-term inflation, not long-term inflation risks, so the Austrian-minded conservatives told us.  Rick and the Austrians didn't get their near-term inflation, so now he and others have moved on to long-term inflation risks.  In both cases (the ramp up to QE and the ramp down from QE), Rick is telling us that the markets will be flooded with cheap money to drive inflation up, which is a bit of a head-scratcher, don't you think?

Now, it's becoming clearer why QE hasn't helped to pick up the economy: lack of demand and lack of trickle-down.  Most middle-class and poor people have few assets beyond a simply-managed 401K or pension, if that.  The inexpensive access to cheap money didn't trickle down to them, which would have otherwise given rise to inflation and spending.  As others have noted, it would have been easier to create inflation by simply dropping cash from helicopters, than to try to do the same with QE.

And no, this is not the same as Hugo Chavez handing out free food.  With free money, you're using it to buy things you need or want, which then stimulates hiring and investment -- something that those Bush rebates were meant to do.  With free food, you fill empty stomachs and little else.