Dee Feat is in Dee Flation, Part 5

  As regular readers will remember, I've taken the time in the past to argue that the boogie man of the Right Wingnuts (and Fatmen craving a famine), inflation, isn't in the cards, and won't be.  The reason is straightforward:  in order for there to be inflation caused by either the TARP or stimulus money, said cash has to find its way into the hands of consumers.  Now, consumers aren't just the you's and me's; businesses that buy machines and raw materials are also consumers.

But that hasn't been where the money went.  That was clear from the start, certainly for the TARP money.  The stimulus has worked out about the same.  So, courtesy of today's Times, is another story confirming my earlier musings.

Here's a delicious quote:
"...the panic amounted to a sudden shrinking of the money supply. That does not show up in official statistics, because no one knows how many repos are done, and repos are not counted in the current measures. But Mr. Gorton argues that repos are money and that the shrinking of that market had economic effects. If so, that impact continues."

So, what's happened is that all that money that left has been replaced.  But, there is some danger:  if we do as the Yale professor recommends, we'll not only have replaced the runaway cash (with TARP and stimulus) once, but twice.  That'll be a problem.  Leave well enough alone.