Money and Inflation; In Evidence

by Jeffrey P. Snider
Alhambra Partners

By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of these effects. No matter what monetary policy setting with regard to balance sheet size, inflation is at best random and at certain times indicative of other independent factors beyond monetary policy (that should, by predominate theory, be attributable to secondary effects of controlled inflation) .

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