When the Fed’s balance sheet rose sharply from 2008-2014 via QE, it didn’t necessarily translate into broad money supply going up because there was no direct mechanism to turn base money into broad money. However, in 2020, the combination of QE and large fiscal deficits (literally sending checks to people) did cause the broad money supply to go up

Back in 2008 and 2009, there was a lot of base money creation, but not a big fiscal transmission mechanism to transfer it to the broad money supply. The fiscal deficit basically just balanced out the major loan losses of the time, so the net result was anti-deflationary but not greatly inflationary.

From a politicians’ standpoint, the best realistic scenario for them is that money supply growth will be high to support the deficits as needed, but that there will be enough productivity growth from AI and other areas to offset it and prevent aggregate prices from increasing too rapidly.

The problem, however, is that even if that were to happen for