Long Silver John

Bank of England Ignites Quantitative Inflation: Now What?

There seems to be a race to the bottom in interest rates, in successive rounds of competitive devaluation to boost exports. But what happens when everybody hits bottom and nobody's buying anything?

QE increases money supply, which is the definition of inflation, and which will translate into higher prices if velocity increases even a little bit. From the above comments, it looks like the Japanese high savings rate held things in check, so that you had low inflation and low rates (leading to the carry trade).

Can the same be said for American spending habits? If this huge increase in money supply gets into the hands of American consumers, what is going to happen to prices then?