Monetary expansion is said to produce inflation, more money chasing the same number of goods should yield higher price levels. Throughout this current period of money printing we haven't seen much inflation.
So where is it?
It is hidden, and it is stored. Both these phenomena suppress money velocity and inflation.
Hidden. In the Federal Debt.
Deficit spending on items like Farm Subsidies transfers cost from the consumer to debt that the taxpayer owes.
Military costs in the middle east to secure oil and secure the use of the dollar as reserve currency also transfer the cost from the gas pump to the debt.
Stored:
Trade Deficit. Dollars exported to other countries create inflation there or is held as reserves. Someday, those countries may spend (more of) their dollars here on assets such as real estate and equities.
Excess reserves. Banks have increased their excess reserves dramatically and have only lent out a small amount.
Corporate profits held outside the U.S. Repatriation of this Trillion dollars would impact money velocity and spike inflation.
Today we don't see much inflation, especially in the items measured by the CPI, but it is occurring. The government's statisticians are hard at work to keep the CPI low and our confidence high. In the future though, inflation will quickly spike.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.