[Zygote]

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i 100% agree here. the fed has a low rate bias that needs to be removed. we need to have, in the terms of the chairman at the BoJ "normalized interest rates"

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So you're saying interest rates should free float? Any attempt to fix them would be a bias and therefore bad, right?

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actually, the money supply inflation doesn't come directly from the fed. it comes from the banking system. the fed can only increase or decrease the actual amount of money in the system (and isn't responsible for the extra amount of money created by banks' loans/operation).

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what about when the fed monetizes the debt?

Furthermore, minus the fed's activity the credit expansion through the commercial banks could not occur. Aside, when the fed pumps money into the system to bring down the rates this doesnt need to multiply or be immediately loaned to be inflationary. This is inflationary as soon as the banks receive free cash reserves. If the fed give me free money, a gift certificate for US goods, they created out of air and i dont choose to spend this immediately this is still inflationary since the marginal redemption value of each dollar in the system is dampened - they just don't know it until i start spending. If i never spend it or transfer it or expand upon it then this is the equivalent of the bills not being created in the first place which makes the central bank's purpose null.