Thanks for posting this. After watching I searched for some diagrams on this process and came cross another one of George Gammon's videos (https://www.youtube.com/watch?v=oLhO7tIAtoY). He comes off super sketchy trying to me, almost like a get rich quick salesman, but the actual information in the video seemed legit.
Anyway, based on the discussions and videos, it seems like QE by itself is relatively neutral with regards to inflation. what's really important is whether the process leads to more lending, but that is largely controlled by other factors.
It definitely didn't seem like QE was actually printing money though, because the govt still has to pay back the initial bond.
Yeah it took me a while to come around to Gammon, he uses a really clickbaity/scammy visual language and marketing copy to get subscribers but if you make it past that to the content, the content is mostly very high quality. The specific video you posted is one of his best.
And right, the classic equation from macro 101 that sums this up is:
P = ( M x V ) / Y
Where price level = money supply x velocity of money / gdp
Velocity is the amount of times a given dollar changes hands on average.
So they are saying that if QE fed reserves never make it out into the real economy via lending or monetized fiscal policy, velocity essentially equals 0 and never affects the price level.
Also on a side not, the other guy George mentions in that video Steve Van Metre is also excellent.
Anyway, based on the discussions and videos, it seems like QE by itself is relatively neutral with regards to inflation. what's really important is whether the process leads to more lending, but that is largely controlled by other factors.
It definitely didn't seem like QE was actually printing money though, because the govt still has to pay back the initial bond.
At least that was my novice interpretation.