The Fed Will Monetize All Of The Debt Issuance The Fed Will Monetize All Of The Debt Issuance Tyler Durden Sat, 10|31|2020 - 12:00 Authored by Lance Roberts via RealInvestmentAdvice.com, There has been a rising concern as of late about surging inflation as the Government injects more stimulus into the economy. While it seems logical, the reality will be quite different as weak economic growth rates force the Fed to monetize the entirety of future debt issuances. The Inflation Premise To fully explain why the Fed is now trapped, we must start with the inflation premise. The consensus expectation is the massive increases in monetary stimulus will spark inflationary pressures. Using the money supply as a proxy, we can compare the money supply changes to inflation. What we find is since 1980, increases in the money supply tend to precede periods of below-average inflation. Such tends to contradict the mainstream belief that increases in the money supply will lead to hyper-inflation due to the currency’s devaluation. Collapse Of Velocity Such has not been the case since 1990 as the byproduct of the money supply, known as “monetary velocity,” has been non-existent.