Frankfurt School of Finance and Managment professor Thorstein Polleit gives a sobering overview of just what we’re in for, as the Federal Reserve increases base money from $870.9 billion to $1735.3 billion in just five months, with much more to come. There is a bit of disagreement in Austrian-ish circles as to when inflation might hit — Mike Shedlock, for example, has argued that we’ll experience deflation first. (Some of the disagreement hinges on the definitions of “inflation” and “deflation” — whether prices, base money, credit, or something else is the key measurement.) I suspect that the deflationists are right in the short term: the annihilation of so much ledgerbook money should create a deflationary pressure. But the Fed is doing everything in its power to print its way out of deflation — which would actually be beneficial as a correction to the inflated real estate, stock, and other prices we’ve seen over the last 20-odd years — and into inflation. Shedlock argues that as long as the banks aren’t lending, we won’t see inflation, and Polleit notes that they have indeed massively increased their excess reserves (from $1.9 billion to $798.2 billion so far). Trouble is, eventually the banks will start loaning out that money again, which is when inflation explodes. (Though even here, some economists dissent from the idea that base money leads the creation of credit money.)