Reply To: Inflation: What's holding the dam together?


Thank you for the reply, Mr. Herbener. If I am understanding this correctly, there is a demand for dollars world wide and this is allowing the Fed to create so much money without any real immediate consequences. Many countries around the world (especially European) are worse off than the US and are putting their money into dollars (treasury bonds mostly?) because they think its safer than their own currency? This begs the question though, how long can it continue? Won’t all those dollars come home to roost at some point after these countries get their act together, or is this a trend that can continue forever because the Fed has the ability to create something from nothing and other central banks do not? I was recently listening to the latest Lew Rockwell podcast with Bill Haynes, and both agreed we are in an economic environment that is unprecedented. Again, I am asking a lot of questions, mostly because I am rather scatter brained on the subject.

The article you referred me to is interesting, but I don’t see how people making their money more liquid (larger checking account deposits) is a demand for more dollars. Isn’t it just a transfer of dollars from one account to another?

Thank you for taking the time to answer.