Inflation Expectations

"Maybe now would be a good time to go over what you expect of me."
--Alice Baxter (Working Girl)

Liz Sonders Fed 'easy money' policies have jacked markets but haven't raised inflation expectations. But why should money created primarily for use inside the financial system influence public expectations for higher prices of goods and services?

Fed’s 2019 rate cuts & liquidity injections helped lift stock prices, but haven’t done same for inflation expectations pic.twitter.com/myJX6lnf8J

— Liz Ann Sonders (@LizAnnSonders) February 5, 2020

Obviously, the Fed's accommodative policies have elevated expectations of higher prices of stocks, bonds, et al among financial professionals. After all, they are the first users of the newly minted cash.

Want to elevate expectations of higher prices among the general public? Then start dropping money from helicopters. As it lands in the streets, watch inflation expectations--and general prices--take off.