The cult of central banks. 1971 the gold standard was abandoned. Since then the average currency value has plummeted – in real purchasing power terms – by 85%. This is a main reason why both parents must work; and why a house valued at $100.000 in 1971, now costs $600.000 or more. Your real inflation per annum from currency-value destruction is at least 3%.

So when an economic crisis arises, thanks to government interference in housing and finance, what happens? More money is printed and rates are held at real negative levels. The result is higher stock and housing prices. But the gains are ephemeral and will not last. Keynesian mysticism is not a panacea for economic ills, financial or housing distortions, or certainly a massive increase in public, private, corporate and governmental debt. The world is drowning in debt that can never be repaid.

How will inflation be 'muted' when the $5 trillion sitting on the Central Bank's balance sheet and which needs to be multiplied by two, to factor in other central banks' balance sheets, flows into the financial system?

Economic Policy Journal

“Increasing its balance sheet by more than fivefold since the beginning of the recession.

A lot of the money the Fed has spent to buy these assets has been deposited by banks back at the Federal Reserve as excess reserves. 

Excess reserves now stand at over $2.5 trillion. Prior to the crisis, in January 2007, excess reserves were only $2.1 billion.

Excess reserves are cash balances that are not in the economy bidding up prices. We are in complete uncharted territory with these reserves. If they start to flow out of the Fed, the price inflation implications will be severe.”

An objective observer looking at the real economy [real inflation at 3-5%, GDP is meaningless, employment at 60%, record levels of margin and housing debt, sub prime auto loans at a record high....] might be forgiven, if he thinks that an economic contraction, starting with a bubble-stock market is only a matter of time. You can't print money and hold interest rates at zero forever. At some point in time the bill needs to be paid.