Forget the word inflation -- it is too politically charged and people think it means all kinds of different things. However, in the long run there is little do

Forget the word inflation -- it is too politically charged and people think it means all kinds of different things. However, in the long run there is little doubt that an expansion of the money supply will cause a rise in the price of goods and services. Forget fancy metrics like NGDP and consider this thought experiment: if all of a sudden magically everyone's bank account balance had the decimal point moved to the right one place, what would happen to prices? After a very short transient period, they would increase by about a factor of 10. This is exactly what is happening right now (on a smaller scale and the magic occurs in the treasury department). The difference is that the extra money has been created, but is not really in circulation. Once banks and companies feel they no longer need the money in their accounts and can begin to put it into the general economy, prices will rise. Sure, the fed could take action to take money out of circulation as companies release it into circulation, but that is too politically unpopular and won't happen.