By Caroline Salas GageThe numbers are proving Federal Reserve Chairman Ben S. Bernanke’s critics wrong.
Bernanke-Led Economy Shows Critics Wrong About Fed
More than a year after Republicans from House Speaker John Boehner of Ohio to presidential candidate Ron Paul of Texas warned that the Fed’s second round of asset purchases risked a sharp acceleration in prices, the surge has failed to materialize. The personal-consumption-expenditures price index rose 2.4 percent for the 12 months ending in December, near the central bank’s 2 percent target.
Comment: Between monetary expansion and prices there is "a long and variable lag", as Milton Friedman explained, and if this is so, and it is, the long lag can easily get longer as well as the variation of the lag can get larger. If this is the case, and most likely it is, we may expect
a) price inflation to show up only after many years
b) when price inflation finally will show up it may be much bigger than any model based on historical data would foresee.