Quantitative easing (QE) is a monetary policy by which the Federal Reserve buys new Treasury issues which are not 'cleared' -taken up - by bond investors
The resulting increase in money supply has been enormous since 2009 - amounting to $16 trillion as of May '22 and representing 75% of 2021 full year GDP ($21 trillion)
With the avowed purpose of encouraging lending and investment to stimulate the economy, this abundance of liquidities has been a key factor in rising stock markets and real estate
After an extended time lag, the easing - liquidities "printed" in the sense that the purchasing power is made available without any material counterparty - have been feeding into price increases raising inflationary expectations to 8% as of May '22
The time lag which dampened inflation in the recent past has been related to the powerful global supply chain providing consumer access to near infinite volumes of produce manufactured by cheap labor, originating in China and elsewhere
Operating in reverse with the disruptions of the supply chain, inflationary trends are triggered by the mutually enforcing pressures of lowered volumes of manufactured goods and increased liquidities on hand
With overlapping factors feeding into price structures - supply disruptions, post-COVID increased demand, squeezed energy and commodity markets, and vast pools of available liquidity - the markets are uncertain about the duration of this inflationay bout - from deeply ingrained to a temporary surge
Short-term interest rate increases in response to inflationary pressure support Short-Dated TIPs (inflation protected) but, over the longest term, high volatility reflects a great degree of uncertainty in PIMCO's 15+ Year U.S. TIPS Index ETF
Vanguard Intermediate-Term Treasury ETF
Broad-Based Inflation Linked ETFs with bond maturities stretching from 5 years to 10 years on average will be evaluated in parallel with the companion theme Short-Dated Inflation Linked