I have wondered why the rapid escalation of government printing of money (quantitative easing 1, 2 and 3) has not led to inflation, which has been minimal for the last few years. If you have wondered the same thing, here is the answer.
At about the same rate the Fed has been increasing the money supply, dollars have left the country in the form of balance of trade deficits and and interest paid on the national debt. So, despite the increase in the money supply of about $470 billion a year for the last few year, the amount of money in circulation in America has not significantly increased. We are not experiencing too many dollars chasing too few goods. As long was we continue to be the tallest midget in the room, we can keep doing this. That is, as long as foreign nations use the US dollar as the worlds reserve currency we are OK. If however, the Chinese or Saudis were to dump their dollars, we would be up the creek. This policy of perpetual quantitative easing is not without risk. The more we do it, the greater the likelihood that a day of reckoning is coming. To learn more follow this link.