Where’s the Inflation?

Ever since the Great Financial Crisis, the world has been asking itself…

“Where is the inflation?”

After all, central banks had embarked on the most aggressive monetary easing in history.

Between 2008 and 2016, central bank:

  1. Cut interest rates over 650 times.
  2. Printed over $12 TRILLION in new money.
  3. And pushed over $10 trillion bond yields into NEGATIVE territory.

And yet, for the most part, inflation was nowhere to be found. Yes, the cost of the living for most Americans continued to rise, but it didn’t rise any faster than it had in the preceding 30 years. Indeed, on a year over year basis, inflation never managed to stay above 2% for very long.


So where was the inflation?

We’ve Had Inflation…
It Just Hasn’t Been in Consumer Goods

It was in stocks, housing prices, and other assets. From its 2009 bottom, the S&P 500 rallied over 170% during that time. Home prices didn’t bottom until 2012, but within four years they were up over 30% (that’s an annualized rate of 7.5%, or more than double the historical average of 3.7%).

Chart: S&P 500 vs. Home Prices Index

What’s going on here?

What’s going on is that all of the money central banks printed never got into the real economy. It went to the banks. And the banks either used it to speculate in the stock market (investment banks) or they sat on it. The rate of growth for bank loans from 2008-20016 was a meager 2.5% year over year. Mortgages were a bit of an exception, but as you can see, they didn’t push the overall loans up much.


To put that into perspective, after the Tech Crash and subsequent recession, bank loans EXPLODED higher from 2001-2008, routinely clocking in at 10% annual growth or higher!


So again, the reason we never saw inflation hit in the aftermath of the 2008 crisis was because the money never actually got into the economy. Yes, the Fed and other central banks printed a TON of money, but it never actually went anywhere other than stocks and mortgages.

Policymakers’ response to the COVID-19 pandemic has been a whole other ballgame.

I’ll detail all of it tomorrow. Until then…

Best Regards,

Graham Summers
Editor, Money & Crisis

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Graham Summers

Editor Graham Summers has spent the last 15 years building a reputation as one of the most sought after and highly respected investment strategists on the planet. His work has been read and quoted by former Presidential advisors, award-winning institutional analysts, U.S. Senators, and more. He’s one of the few analysts on the planet to...

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