The M2 moderation likely has something to do with the money market accounts earning nothing? So maybe everything is in stocks or bonds for yield.
That seems to be what Bernanke wants. QE1 has not been reversed out. The money was printed, it was used by the banks to do the asset swap, as you suggest. But the money was a permanent expansion in the amount of dollars in existence. If the Fed ever tries to destroy dollars, now that would be something.
I don’t see any inflation in general, but the fact is we have seen huge increases in commodities prices over the last couple of years, in the face of a recession which should be suppressing these prices. Worrisome? Yeah, quite a bit.
But not as worrisome as Ben creating money out of thin air and using that power to the primary benefit of banksters and Wall Street.
Count me in the camp of “nothing good will come of this”. But we can’t make a specific call on timing and say that just because the bad thing hasn’t happened yet, that all is hunky dory.
The long term US bonds are already starting to puke. Short term US paper is in vogue to avoid any near term inflation. When it becomes obvious, any day now, that inflation has taken hold (see oil price) in earnest then the bond bubble is over with a large, pop.
That's where most people live. Sometimes it makes me uncomfortable saying I'm sane and everyone else's crazy but for centuries people have said that things were getting worse and for centuries things got better. Rush says doom'n'gloom is the easy mindset and most people do what's easy, but my view is that we hate pain more than we like pleasure so we tend to focus on the bad.
So the bottom line here has to be that for making things work we need to set aside both pain and pleasure and just look at what is. Pain/pleasure's more fun at bedtime anyway but that's another thread...