``The conventional view holds that massive QE has not caused inflation because the Fed's monetary fuel has remained unused as "reserves" on bank balance sheets.  From this viewpoint, inflation risks lurk somewhere out in the future... I take a much different view.  QE is anything but benign.  The Fed's monetary fuel certainly doesn't just sit inertly on bank balance sheets.  Indeed, this monetary inflation is immediately unleashed upon the financial markets, with the newly created "money" setting off a chain-reaction of transactions, flows and market impacts.  Over time, this dynamic foments huge distortions in marketplace liquidity, risk perceptions, speculative financial flows, asset prices and market stability.  And, somehow, when Fed officials discuss QE they avoid any mention of what have become conspicuous inflationary effects on securities prices.''

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