That is because most of the currency which got printed never made it into the market. They just used it to buy more currency. And yes, that last sentence describes not only EXACTLY what they did, but the absurdity of it as well.

+1 for you. I think we've all been scratching our heads on the flat inflation rate. I'd like your take on these possibilities.

1) Could the debt be holding down the inflation rate?

2) If the central bankers conspire to increase their money supplies at the same rate and keep their interest rates near zero, might that have a dampening effect on inflation? And might this also be keeping gold and silver trading in a narrow range?

`Complicated indeed Robbie. The pumped up stock market has been caused by the the Federal Reserve Bank's stimulus program which is really Keynesian "priming the pump" as partially described here...
"...So there's a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money.

The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people's hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. Just that simple! Too simple, in fact, for the policy-makers of that time.

If this is the proposed definition and cure for recessions, then what about depressions? Keynes believed that depressions were recessions that had fallen into a "liquidity trap." A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what individuals were not, namely, spend. In his memorable phrase, Keynes called this "priming the pump" of the economy, a final government effort to reestablish the circular flow of money... "
http://www.huppi.com/kangaroo/Keynesiani...
The ability to expand the money supply without limits or any discipline coupled with unpayable runaway debt means that this will unravel with great pain. Its only a question of when and how bad.

Thanks for defogging the subject.

The essence of the crime of counterfeiting currency is theft. This fake money, whether coined, printed, or digitized, waters down the value of the existing real money by reducing the amount of goods that real money can buy. The Federal Reserve Bank has reduced the value of the dollar by 96% since 1913.Mike seems to think this is no problem. Do you???

It is counterfeiting by the political class and always harmful.

Another interesting MM post, many good ideas so I give 1p.
But the central theme is wrong, -that- if you know inflation will happen you can plan for it. You can predict inflation, but not quantify it. My experience in corporate/economic planning is ok if it is very low, say under 1%. Inflation is a sort of animal with a life of its own, it is inevitable that people plan conservatively so anticipate high inflation, the outcome is that the inflation rate escalates and there is then the danger of currency and economic collapse. So, government takes some action, the public panic the other way, the economy swings into depression.
The libertarians say that only governments cause booms and busts, I doubt that, but they certainly make them more frequent and probably more severe.

The point about trading at the market price -yes but- consider Soros trading currency but government is bigger even than Soros, so the concept of market price with one enormous buyer/manipulator is hardly valid.
Maybe this is a mis-statement of the proposition from Lets Shrug- inflation must increase at the rate at which money is created, well there may be some manipulation in definition, but it does not happen as blarman etc explain, and remember technological productivity is still working to reduce prices, the question is, how long can inflationary governments expect that productivity will continue to enable them to pull these counter-inflationary rabbits out hats?

and beware -- who issues the inflation data? do we
trust anything from the liars in this administration??? -- j

Well I'm sure MM would be suited up and stretching right now if they were... he has many degrees in all things, ya know?

You mean they aren't? :-)

Of course, I was teasing. I did live in Chicagoland for a while. The wind in the Windy City refers to the politics, not the weather.

If this is Chicago I-AM-IN-THE-WRONG-PLACE. AH!

Inflation is only a BAD idea for us. It empowers people who don't produce and save (i.e. people who mooch), and it empowers people who wish to be our overlords (i.e. people who loot). It is a particularly insidious weapon they can use against us. What I am writing reminds me of Francisco's conversation with Rearden during the money speech.

If only numismatic gymnastics were an olympic event....