In early October 2008 I wrote an article for Seeking Alpha titled Inflation, Deflation and the US-Chinese Relationship.

Written shortly after the TARP program was introduced, I attempted to explain that the "financial crisis" was really more of a "credit crisis" and a by product of years of global trade imbalances, not a liquidity crisis.

Over the past several weeks I have read countless articles supporting conflicting positions on the Fed's ever increasing injections of capital into the banking system as well as the proposed 700 billion dollar bailout of the banks. Most authors have taken one side or the other, either agreeing with the massive injections as necessary or railing against the Fed and Treasury for leading us down an inflationary spiral.

I agree with those author's that have pointed out that the TAF and other liquidity injections to date have not increased the money supply. Unfortunately, this was not and is not the intent of the fed but a byproduct of a frozen banking system. The Fed's end goal is to increase bank lending which is by its very nature inflationary, as it increases the availability of money in the domestic and global economy.