Top Economists Answer: Whatever Happened to Inflation?
Since 2008, the Federal Reserve has been trying to stave off economic disaster with an unconventional monetary policy tool known as quantitative easing. By buying financial assets from commercial banks and other institutions, the Fed has massively expanded the money supply–quadrupling it since the practice began.
Many economists, particularly followers of the Austrian school, deplored the practice and predicted that the unprecedented currency and asset price manipulation would lead to huge and damaging price inflation. Reason was among them, declaring on our October 2009 cover: "Inflation Returns!"
Six years later, official consumer price index inflation sits at just 2 percent annually from July 2013 to July 2014, the latest period for which figures are available. This is identical to the rate for the previous year. We asked four economists and market analysts to revisit what they originally predicted would happen after quantitative easing and assess whether (and why) they were right.