[Praxeologue]

For the last three years, —every year—the USA has been pumping an additional 1 million barrels @ day of oil. The EIA expect that the USA will pump an additional 1 million barrels @ day in 2014 and 2015. Oil and natural gas have so far added an addition 400 billion to the US economy annually. In 3-4 years that number will rise to 1 trillion dollars annually. Oil is shrinking the US trade deficit and shrinking the federal budget deficit. The added inflow of revenue to the federal government is so significant that the if it continues at the rate it has between 2012-2013 when the federal deficit shrank from 1 trillion dollars to 650 billion dollars—in three years the federal budget will balance.

One last thing. The fed has been creating some 8 trillion dollars ex nihilo from nothing. Right?

Your math overstates the impact of U.S. petroleum production.

Over the past three years, U.S. oil production has increased by a total of three million barrels per day and natural gas production has increased by 3-1/2 TCF per year. That doesn't come close to $400 billion per year. I think that you may be off by a decimal point.

The biggest relative impact of increased petroleum production is in a country like Canada, with an economy one-tenth the size of the U.S., where oil production is forecast to increase by 3.4 million barrels per day over the next eight years.

Also, the Fed's quantitative easing programs have purchased $2.6 trillion of U.S. Treasuries, not $8 trillion. You might call that 'printing', but most of those securities have been purchased by crediting a Fed liability account 'aggregate reserves of depository institutions'. So, as Bernanke responded when asked if he was printing, "not technically".

[ckilmer]

Also, the Fed’s quantitative easing programs have purchased $2.6 trillion of U.S. Treasuries, not $8 trillion. You might call that ‘printing’, but most of those securities have been purchased by crediting a Fed liability account ‘aggregate reserves of depository institutions’. So, as Bernanke responded when asked if he was printing, “not technically”.
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Ok, I’ll go with your numbers. The other thing is that 95% of that money that the fed “Printed” didn’t actually go into circulation. It just stayed on their ledgers. The 5% or so that did go into circulation went to the stock markets which pumped up the numbers there which jacked up revenue to federal coffers. The rich got richer under obama —so they paid more taxes. The federal deficit decreased by 350 billion between 2012 and 2013. My understanding was that roughly one third of that decrease came from higher taxes, one third came from increases in stock market related revenues and one third came from increases in oil patch related revenues. If you understand differently, I’d like to see your sources.

While the federal “printing” is inflationary the rapid deceleration of M2 since 2008 was considered to be deflationary. That’s what the fed was looking at. There wasn’t a lot of borrowing going on—which speeds up M2. It looks like M2 may have turned around recently.—which is why the fed would start to taper their buys. But maybe you understand this differently as well. If so I’d like to see your sources.