Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.


The Fed has been pumping billions of dollars of reserves into the banking system over the past few years. This hasn’t created any inflationary pressure yet, but monetary hawks worry that it will if the Fed waits too long to unwind its balance sheet. “You cannot afford to get behind the curve on reining in this extraordinary amount of liquidity because that will create an enormous inflation down the road,” said Alan Greenspan a couple of years ago.

Karl Smith agrees that this is an issue that needs to be taken seriously. At the same time, it’s also an issue that Ben Bernanke has the tools to address. “The Fed has complete power to slow the expansion of lending and hence the emergence of hyper-inflation,” says Karl, “and it doesn’t have to remove its reserve injections to make it happen.”

Click the link for the full explanation. It’s a little long, but very friendly. Basically, the Fed’s authority to pay interest on reserves is the hero of the story. But the bottom line is simple: hyperinflation just isn’t something to worry about, no matter how many gold bugs tell you otherwise.

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you'll agree is worth supporting.

payment methods

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you’ll agree is worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate