Every penny of the $5 Trillion "stimulus" is inflationary pressure.
Not quite.
Most of the stimulus that has been used has been thrown at the largest banks. There are tremendous deflationary pressures coming from the banks due to a large horde of MBS and derivatives of such that are worth much less than the banks book them at. The combination of tremendous stimulus (via pawning off about half of these toxic assets on the GSEs and the central bank) versus tremendous deflationary pressures (via the other half of the ilk that they still own) has been largely... nothing.
This is why there has yet to be the hyperinflation that the hardcore, and unwise, Austrian contingent predicted.
There is a large dose of inflation coming but not from this source, at least not yet. Some of this will come about and another bunch will come when foreign held dollars seep into the market. TPTB are trying for a long slow decline as opposed to the market clearing that we should have done 5 years ago.
As far as Keynes goes, don't blame him. Had we held to true Keynes principles we would have run a budget surplus when time were good not given large tax breaks into the teeth of a yawning trade deficit. MOF the trade deficit wouldn't have been allowed to occur under a Keynesian managed economy either. He correctly predicted that as economic poison that would eventually bankrupt a nation.
I take economic ideas where I find them. Almost all of them have at least a grain of wisdom in them. But for this situation I honestly believe that understanding Keynes (the real Keynes not the parody of him that is pandered by those who disagree with him) and Triffin is enough to understand what has happened and why most everyone on both sides of the aisles has been dead wrong about it for years on end.
Will
