Erm... I think asset price inflation actually did happen. With stock prices (which anti-austerity economists say are "fair" in that you cannot expect P/Es around 15 under ZIRP, so get used to 20) the result is wealth redistribution from the majority of the population to the richest people, but since rich people don't typically increase consumption that much as a result of extra wealth, this does not affect things like food prices. However, housing, which is also one of the kinds of assets the rich buy as an investment (rather than to "consume" it/live there), had its prices increase around the world as well, which I think hurts most people really bad.

Another big issue is all the stuff that got financed that normally couldn't be financed, with investors everywhere willing to buy junk bonds and any imaginable kind of stock. How that works out remains to be seen.

(Personally I don't have a firm opinion on stimulus/austerity, apart from it being a far from obvious issue - that I believe rather firmly.)

I'd agree with your first paragraph and disagree with your 2nd one with the exception of the tech bubble -- it's been really, really hard for normal businesses to get bank loans even when competing with 0.1% interest rates from the fed.

My theory is that the administration wanted more stimulus, couldn't make it happen politically in useful ways (infrastructure projects, school building, new nuke plants etc), so the only outlet they had was QE, which did the job somewhat (we're not in a great depression), but did have the negative effects you highlighted. I think we'd be better off had the money been spent on infrastructure projects -- same sugar rush preventing a crash, plus we get a bunch of stuff afterwards. Right now we just have paper assets in the aftermath.

Just the tech bubble?.. I dunno. I'm not that good at these things, but fracking comes to mind, and subprime auto loans.

"Couldn't make it happen politically?!" That part I don't get. You mean they couldn't just give everyone money so they spend it instead of giving money more or less directly to the richest people? You mean the citizens would revolt?!

(Actually the possibility of QE on the scale we had in a bunch of democracies left me dumbfounded. Why do people put up with that shit?)

Fracking is new tech with a ridiculously short path to profitability, you pump the oil and you sell it. It's just good business to pump money into fracking (maybe bad environmentally, but that's beside the point). I wasn't aware of subprime auto loans, I'll have to look into that at some point. But the point about traditional business being really, really tight on credit even during QE still stands.

Politically, citizens have nothing to do with it, look at Congress. They're voted in on fears of socialism and kenyans, not like they can turn around and support infrastructure spending.

Actually fracking doesn't look like a very good business as long as Saudi Arabia can extract oil from the ground at $6/barrel and thus lower the price of oil to a level where fracking does not pay off. I think a lot of these businesses therefore went belly up recently. But again this stuff is not my thing... so I could be wrong.

Also - what do you mean "credit is tight for businesses"? Haven't businesses of all kinds been vigorously buying back their stocks lately, while issuing bonds at the same time? Those bonds having very low yields?

Maybe grandma has a problem getting a loan from a bank to run her small shop (why would the bank lend out money when they get risk-free handouts from governments?.. AFAIK banks are actually notoriously bad at credit risk assessment when giving out loans to businesses so they tend to not bother); but definitely a public company issuing bonds has no problem of prohibitively high yields.

What stimulus? According to Krugman, fiscal policy in the US fell far short. In fact he classifies temporary decreases in spending -growth- as austerity. Frankly most developed economies have thrown the kitchen sink at their problems to the extent that its near impossible to disentangle policies that coherently resemble either strategy. That makes analysis difficult, but also means all the economics bloggers blog about how right they were. Such is the dismal science.

Stimulus compared to what others wanted. Indeed since 2010 we've been cutting lots of domestic spending but you wouldn't know that watching TV talk about socialism, so people have been calling for crazier cuts while predicting doom. They've consistently been very very wrong and had no accountability for it.

I suppose 'wasteful' isn't descriptive enough. What I was thinking was something like, 'a big glob of money generally earmarked for boosting the economy and other do-goodery'.

Sure 500bln is a delicious shot in the arm, even if most of it is 'wasted' on the cronies. I can't predict what will trigger inflation, hyper- or otherwise, in this distorted economy. All I want to know is, just when exactly can I expect the payoff? Will there be growth or recovery such that the debt holders are paid back? No? Never can expect it, realistically? Ok, let's cut it out with the stimulus then, because I'm sick of bailouts and blatant cronyism.

You already got the payoff, look at some charts of gdp and employment figures from 2008-2012. The downward slide was stopped and the slow recovery started, exactly the opposite of what the naysayers predicted.

In other words there was a huge change in the derivative of those rates, downward change flattened and bent upwards.

"You already got the payoff" equaling "predicted doom averted" seems very abstract. I interpret that as, "zombie economy continues to shamble along according to plan".

Now, going instantly another 500bln in the hole and rolling over that much more debt service every year is concrete. I can measure that failure.

Was the stimulus worth it short term or long term? I don't think so!

Regarding quantitative easing, I would actually assign support for pursuing to the pro-austerity camp as it devalued the dollar and caused the average consumer's purchasing parity to decrease. It was austerity applied to the population at large to solve the problems caused by only a fractional portion of the population in the US.

But it didn't devalue the dollar, inflation's been really low for the last 7 years.

Honestly it doesn't make much sense, and should really make people hesitate to pursue deflationary measures. China's fiscal policy does serve to deflate the dollar, so that counterweights QE a little, but that much? Maybe, I guess?

I mostly agree, but I do have to point out that inflation has occurred. It's just been confined to a limited number of areas. Housing is completely insane in many areas when compared with median income, and that's largely a side effect of cheap money. Food, fuel, college tuition, and health care also continue to inflate, with tuition being almost as bad as housing.

Hyperinflation is almost impossible in a highly leveraged credit economy, but cheap money has to go somewhere.

I'm personally unimpressed with all the various schools of economics. Sometimes it seems like astrologers and palm readers arguing over which technique happened to randomly seem to work last time.