Money printer go brrrr.

From the Federal Reserve site:

At our June meeting, the Committee discussed the economy's progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of "substantial further progress" is still a ways off, participants expect that progress will continue. We will continue these discussions in coming meetings. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.

That "asset purchase guidance" includes the Fed's continual pumping of $120 billion a month into the banking system. From their statement earlier this year:

The Fed also pledged to keep buying at least $80 billion a month of Treasury securities and $40 billion a month of and of agency mortgage-backed securities "until substantial further progress has been made toward the Committee's maximum employment and price stability goals."

We should be reminded, however, that those goals include an equity component.

As discussed in the Monetary Policy Report, the pandemic-induced declines in employment last year were largest for workers with lower wages and for African Americans and Hispanics. Despite substantial improvements for all racial and ethnic groups, the hardest-hit groups still have the most ground left to regain.

Hold that thought for a moment.

Inflation has increased notably and will likely remain elevated in coming months before moderating.

Let's leave the exalted grounds of the Federal Reserve for a moment and take a walk through the real world.

Walk # 1:

Walk #2

Everyone knows that the best way we can help the poor and downtrodden is to enrich billionaires while simultaneously making everyday purchases more expensive.

And what about that inflation? Nothing to worry about. They have it all under control.

Historians agree that the origins of Germany's post-war inflation lay in the failure of the country's political classes to make hard choices. The Germans had funded their war effort largely with debt, accompanied by the printing of central-bank money. After the Weimar Republic was established in 1918, inflationary finance continued. Government deficits funded with newly printed marks had the advantage of maintaining employment at high levels and keeping the economy buzzing. As inflation soared, enterprises were able to borrow from the Reichsbank at rates so low that capital was, in effect, free.

Who supported these policies? You know, reasonable people.

This policy had the support of many seemingly reasonable people. Walther Rathenau, the cultured head of the electronics firm AEG and a future foreign minister, suggested in January 1921 that should the economy turn down "we ought to print money a bit faster and start construction works, using the employment these create as a dam against the depression. It is incorrect when people said that printing money was bringing us ruin."

Shut up, peons. The smart people know what they're doing. Things are going great!

One of the curious features of the Weimar inflation was the refusal of the Reichsbank to accept that rising prices resulted from its own money-printing.

Institutional avoidance of responsibility?

Inflation was difficult to bring under control not merely because the central bank was obtuse and politicians feared the inevitable cost in terms of unemployment and bankruptcies. Rather, once under way, inflation develops its own lobby which is not responsive to reason. The industrialists, who benefited from inflation, only changed their position after the economy and society started falling to pieces during the course of 1923.

My favorite constituency in all this was these guys.

Another group of beneficiaries, the over-worked printers at the Reichsbank's presses, even went on strike when a currency stabilization plan was eventually announced.

Germany's inflation undermined morals and manners, and fostered corruption. Respect for government and the rule of law declined as prices escalated and social order broke down.

And then Hitler happened.

To bring this to modern times:

Once again, an era of negative real interest rates has produced low unemployment and "bubble" prosperity. Powerful interests support the easy-money policy, while central bankers ignore the damage their policies produce. Wealth has been redistributed on a grand scale. The newly rich flaunt it, while those less well-positioned feel squeezed. Rancor runs high in society. Popular sentiment has turned against foreigners.

And here we are.

In fairness I should point out that there are credible arguments against the notion that what the Fed is doing is money printing. You can find one of the more thoughtful ones here.

He makes a convincing technical case, interesting for finance nerds like me anyway, but the central argument remains that what the Fed is doing, all of it, taken as a whole, is stimulative. That's the whole point. There's no other reason to do it, and that at a minimum is playing an outsized role in the inflation we see today.

Buckle up!