Did Bernanke and all that QE cause the current inflation?

That is the topic of my latest Bloomberg column, here is one excerpt:

Sometimes it is alleged that this “Bernanke inflation” was channeled into asset prices, such as equities and crypto, rather than retail or consumer prices. That hypothesis doesn’t fit the data, either. During most of Bernanke’s tenure, stock prices were broadly within historical norms, considering such measures as price-earnings ratios. Some particular stocks were overpriced, as is always the case, but stocks as a whole were not crazy high. As for crypto, inflation rates are much higher today — and crypto prices have been collapsing, not soaring.

More generally, it doesn’t make sense to talk of inflation or new money as being “trapped” in one particular sector. Assume for the sake of argument that somehow inflation was concentrated in the crypto sector. You might think that sellers of crypto could just turn around, take their sales receipts, and buy more crypto. Why would you act that way? If you are bullish on crypto, why initially sell at all? Even if you did end up selling, your initial crypto sale and subsequent purchase will more or less offset each other in the crypto sector.

The reality is that, if the new inflationary monetary injection somehow flowed first into the crypto sector, it would soon find its way into the broader economy and push up prices across the board.

Another claim I hear is that the Fed simply did too much quantitative easing, which was eventually going to catch up to the economy. It’s like pumping too much air into a balloon; sooner or later it has to burst.

But monetary policy does not work that way. It does have lags, but a major inflationary episode leads to noticeable increases in inflation in a bit more than a year, as has been shown by the research of Milton Friedman and others. The effects of new monetary policy do not sit idle for a decade or more.

No, in other words.