The story below only confirms the fact.
The only questions are when and how much.
Suppose the Fed sells $1.2 trillion in securities.
That's $100 million a month in new money for one year.
Or, $50 million a month for two years.
Or, $25 million a month for four years.
All of this is new money, as they say over at the Treasury. Not just a refinancing of old debt.
These are huge numbers.
The longer the money stays in the system, the higher the probability that banks will use it as reserves to make new loans.
And new loans will increase the money supply.
And, as Friedman said, Inflation is always and everywhere a monetary phenomenon.
* * * * * J B K * * * * *
San Francisco
March 26 (Bloomberg) -- Federal Reserve officials are moving toward a consensus that asset sales will play a more prominent role in their exit from the most expansive monetary policy in the central bank's history.
Chairman Ben S. Bernanke told legislators yesterday that "restoring the size and composition" of the Fed's record $2.32 trillion balance sheet to a "more normal configuration" is a long-term policy goal. St. Louis Fed President James Bullard said in an interview the central bank must start making plans now for future asset sales.
"There does seem to be agreement that you want to get back to a normal-looking balance sheet at some point in the future," Bullard said. "We want to someday get back to a pre-crisis balance sheet -- both the size of it and the fact that it would be an all-Treasuries balance sheet."
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVMsKXGRZEbI&pos=4
