More thoughts on inflation and the current Fed regime

Even with all the liquidity and easy credit that the Fed has dumped into the system, US economic activity has declined by about 4% year-on-year. If liquidity and cheap money were all that it took to cause inflation, we'd surely have it now.

Is the Fed's liquidity and easy credit showing up as income for American consumers? No. It's cheap to borrow money right now, but it's not like the Fed is telling people they won't have to pay it back.

While it may be "obvious" that low rates and rapid money supply growth will cause runaway inflation, keep in mind that for a long time it was also "obvious" that the sun revolved around the earth.