People are looking at the Federal Reserve as the cause of inflation. That’s certainly been true. Over the last 15 years, since 2008, the Fed’s Balance Sheet has gone from under $1tn to over $8tn.

However what the Fed has done, is dwarfed by what the Treasury has done.

At the start of 2008, 15 years ago, Federal Government debt was below $10 trillion. It’s now over $30 trillion. Money owed by the government is nothing more than a promise to print money tomorrow.

Government debt can instantly traded back into cash which can be spent. New Treasury debt is thus synonymous with printing cash itself (assuming it gets spent).

As long as the government continues borrowing, we’ll have inflation of asset prices. Every penny that the government borrows gets spent and put back into the system. Nothing leaves.

The Fed has shrunk it’s balance sheet by $0.6tn since it commenced its Quantative Tightening (QT) in April 2022. That’s very commendable.

In the same period the Treasury has increased its debt by $2.8tn.

Whether all that newly created fiat finds its way into asset prices or consumer prices or a combination of the two is hardly the point. The point is that the total fiat supply is rising daily, debasing its value.