When Schwartz and Friedman wrote their monetary history, they found three variables that contributed to the total money supply: 1) High powered money supply pr

When Schwartz and Friedman wrote their monetary history, they found three variables that contributed to the total money supply: 1) High powered money supply produced by the central bank 2) Money held in deposits, available to be increased via the fractional reserve multiplier effect 3) The deposit:reserve ratio, which shows the strength of the fractional reserve multiplier effect The financial crisis seems to have tanked 2 & 3, such that the Federal Reserve would have needed to do much more QE than it did to keep up with demand for money. They also found that price growth and wage growth are affected by history: a history of slow money growth predicts an increase in money supply will be absorbed by more output. A history of high money growth suggests that more money growth will lead to modest output changes and an increase in inflation. Scott Sumner echoes your fear about a coming recession, but thinks that appropriate NGDP growth via the right amount of money printing can lead to a soft landing without inflation. Given that this has been his entire career, I think it is very possible that we won't necessarily see renewed high inflation. Scott Sumner post here: http://www.themoneyillusion.com/the-next-five-years/ http://www.themoneyillusion.com/the-next-five-years/