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I find it kind of odd that we are not experiencing any significant inflation recent years despit the low rates and quantitative easings.

Is there a consensus why this is the case among economists? If not, what are the mos popular explanations?

I am refering to countries in weastern EU and USA.

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  • $\begingroup$ If you are asking about a particular country or group of countries, could you please edit your question to clarify this. $\endgroup$
    – Adam Bailey
    Commented Jan 25, 2019 at 10:59
  • $\begingroup$ @Adam Bailey fixed $\endgroup$
    – user123124
    Commented Jan 25, 2019 at 13:34
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    $\begingroup$ For the US ... No. $\endgroup$
    – 123
    Commented Jan 25, 2019 at 15:26

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If your question is about Europe, yes there is. Inflation took time to rise because commercial banks have used injected liquidities to consolidate their balance sheet instead of stimulating demands by creating credits (that did not previously exist when they make loans). This is called the money multiplier. The multiplier was somehow blocked (to ~$1$) because of their precaution behavior.

On March 10, 2016, the ECB has even considered the possibility of giving 200€ per month and per person to stimulate inflation. And this with the main idea of circumventing the commercial-bank system. This unconventional monetary policy is called monetary helicopter.

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  • $\begingroup$ what does "consolidate their balance sheet " consits of? $\endgroup$
    – user123124
    Commented Jan 25, 2019 at 8:00
  • $\begingroup$ My suspision as a layman is that all the money and low rates went into stocks and real estate thus not getting into "real" inflation driving sectors such as healthcare, food, school and infrastructure. Is that a total missconception? $\endgroup$
    – user123124
    Commented Jan 25, 2019 at 8:03
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    $\begingroup$ @Maxed I have made a quasi-abusive use of the word "consolidate". What I meant is that the subprime crisis and its consequences have contaminated the Euro-zone's commercial banks through securitization, interrogating the default risk associated to their assets and liabilities. Injected liquidities have thus often been used to anticipate these potential defaults on the one hand, and also to elevate their fractional-reserve ratios on the other hand. $\endgroup$
    – keepAlive
    Commented Jan 25, 2019 at 14:11
  • $\begingroup$ hmm just read something about what happend after the 08-crisis. Ít seams like alot of regluation where imposed on the banks after the crisis. Are you saying that the QE was nessesary or/and used to fullfill these demands imposed by authorities? $\endgroup$
    – user123124
    Commented Feb 5, 2019 at 20:15
  • $\begingroup$ for example en.wikipedia.org/wiki/Basel_III $\endgroup$
    – user123124
    Commented Feb 5, 2019 at 20:26
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I’m not a professional economist so take what I say with a pinch of salt; but my understanding is that the central bank in Germany, one of the strongest central banks in Europe, has very strong regulations and policies against re-igniting inflation because of the effects of hyper-inflation during the inter-war period.

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  • $\begingroup$ and this forces banks and inverstors to put all the money in certain corners of the economy where they can make some money? But these corners are also not contributing to inflation? $\endgroup$
    – user123124
    Commented Jan 25, 2019 at 8:09
  • $\begingroup$ @Maxed: Germany is already a strong economy last time I looked so people are making plenty of money whilst adhering to the Banks anti-inflation strategy. $\endgroup$
    – Mozibur Ullah
    Commented Jan 25, 2019 at 8:16
  • $\begingroup$ @Maxed: Isn’t that an argument for extending regulation to tax havens and the like so such reckless policies can’t be pursued? $\endgroup$
    – Mozibur Ullah
    Commented Jan 25, 2019 at 8:17
  • $\begingroup$ Thats a complicated question. To many variables,I am just trying to understand the inflation atm. What justice means or is I leave alone for now. $\endgroup$
    – user123124
    Commented Jan 25, 2019 at 8:20
  • $\begingroup$ @Mozi the argument that consists in saying that Germany is "afraid" of inflation is, admittedly, widespread. But this argument is only political, not technical... not to say instrumentalized. $\endgroup$
    – keepAlive
    Commented Jan 25, 2019 at 20:42

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