The Fed Will Monetize All Of The Debt Issuance

Read more on this subject: Federal Reserve
News Story Source:, by Tyler Durden
While it seems logical, the reality will be quite different as weak economic growth rates force the Fed to monetize the entirety of future debt issuances.

The Inflation Premise
To fully explain why the Fed is now trapped, we must start with the inflation premise. The consensus expectation is the massive increases in monetary stimulus will spark inflationary pressures. Using the money supply as a proxy, we can compare the money supply changes to inflation.

What we find is since 1980, increases in the money supply tend to precede periods of below-average inflation. Such tends to contradict the mainstream belief that increases in the money supply will lead to hyper-inflation due to the currency's devaluation.

Collapse Of Velocity

Such has not been the case since 1990 as the byproduct of the money supply, known as "monetary velocity," has been non-existent. As discussed previously:

"The velocity of money is important for measuring the rate
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