Inflation is the lodestar upon which many investment decisions will hinge. TLDR: Inflation is not possible as long as Banks don't lend.
The money printing part is irrelevant if the money lending part breaks down, which is what seems to be happening. Banks are rightly tightening up a lot on lending because of the poor economy and people's ability to repay. And savings are going up and debt is being paid off as people save the money they have in fear they will need it to survive an uncertain future. Both of those activities are highly deflationary.
Right now, the cost for some goods is going up; but wages are not, and consumer credit is dropping a lot. Under current conditions, inflation will not be an issue, even if the Fed wants it. On the other hand, if the Fed bypasses the banking system and provides enough direct stimulus, inflation could become real. The Fed wants more inflation to lower their cost of debt.
Here's a great article that discusses this topic in excellent detail:
The Federal Reserve’s Bazooka is Broken – Will Direct Lending Be Next?
We are at such low interest rates, that stimulus via interest rates is now impossible. If interest rates were to become negative it would force a run on the banks. That is one reason the Fed wants a digital dollar, and maybe even to get rid of paper currently entirely. As mentioned at the recent IMF meeting, paper currency is literally the
only thing standing between us and negative interest rates. Read the IMF blog here:
Cashing In: How to Make Negative Interest Rates Work
The fed thus has two tools at its disposal to stimulate consumption and create inflation. They can get rid of cash and lower interest rates to negative rates; or they can make the Fed its own bank and allow them to lend directly and distribute digital credits to the needy and unemployed - and perhaps even as direct UBI payments. (Or they could do both.) Either solution is nothing but extreme.
I've been spending an inordinate amount of time reading and listening to economists and investors discuss this topic because it is fundamental to how we deploy our assets. I believe there is no doubt that we are headed into a deflationary spiral as bankruptcies and foreclosures start to roil the commercial market and things trickle down from there. Investment-wise, for now this means holding more bonds and cash than I've ever held before. We also have a lot of very good rental real estate. I did sell one house, but we're going to hold onto the rest as our hedge on the inflation side. If prices go up, we make money; if they go down, our ROI goes up. :shrug: