<p>If your question is about Europe, yes there is. Inflation took time to rise because commercial banks have used injected liquidities to consolidate their balance sheet instead of stimulating demands by creating credits (that did not previously exist when they make loans). This is called the <a href="https://en.m.wikipedia.org/wiki/Money_multiplier" rel="nofollow noreferrer">money multiplier</a>. The multiplier was <em>somehow</em> blocked (to ~<span class="math-container">$1$</span>) because of their precaution behavior.</p>

<p>On <a href="https://en.wikipedia.org/wiki/Helicopter_money#In_the_Eurozone" rel="nofollow noreferrer">March 10, 2016</a>, the <a href="https://www.ecb.europa.eu/home/html/index.en.html" rel="nofollow noreferrer">ECB</a> has even considered the possibility of giving 200€ per month and per person to stimulate inflation. And this with the main idea of circumventing the commercial-bank system. This unconventional monetary policy is called <a href="https://en.m.wikipedia.org/wiki/Helicopter_money" rel="nofollow noreferrer">monetary helicopter</a>.</p>

CC BY-SA 4.0
2019-01-25T08:00:23.397Z
what does "consolidate their balance sheet " consits of?
user123124
CC BY-SA 4.0
2019-01-25T08:03:10.410Z
My suspision as a layman is that all the money and low rates went into stocks and real estate thus not getting into "real" inflation driving sectors such as healthcare, food, school and infrastructure. Is that a total missconception?
user123124
CC BY-SA 4.0
2019-01-25T14:11:00.757Z
@Maxed I have made a quasi-abusive use of the word "consolidate". What I meant is that the subprime crisis and its consequences have contaminated the Euro-zone's commercial banks through [securitization](https://en.wikipedia.org/wiki/Securitization), interrogating the default risk associated to their assets and liabilities. Injected liquidities have thus often been used to anticipate these potential defaults on the one hand, and also to elevate their fractional-reserve ratios on the other hand.
keepAlive
CC BY-SA 4.0
2019-02-05T20:15:54.310Z
hmm just read something about what happend after the 08-crisis. Ít seams like alot of regluation where imposed on the banks after the crisis. Are you saying that the QE was nessesary or/and used to fullfill these demands imposed by authorities?
user123124
CC BY-SA 4.0
2019-02-05T20:26:56.270Z
for example https://en.wikipedia.org/wiki/Basel_III
user123124
CC BY-SA 4.0
2019-02-05T21:37:59.833Z
@Maxed. Yes exactly, even if there were other (more delicate) possibilities than benefiting from QE to comply with Basel3: the point is that com.banks could not disentengle the uncertainty associated to the components of their balance sheets from their exposures to liquidity risks, i.e. to the fact that depositors may all want to withdraw their money at the same time... which event characterizes all what liquidity risk is about: fractional-reserve ratios pushed to their max. = [full-reserve banking](https://en.m.wikipedia.org/wiki/Full-reserve_banking) = no liqu.risk. B3 is not as extreme.
keepAlive
CC BY-SA 4.0
2019-01-25T07:56:25.473Z
2019-01-25T07:56:25.473Z
keepAlive
<p>I’m not a professional economist so take what I say with a pinch of salt; but my understanding is that the central bank in Germany, one of the strongest central banks in Europe, has very strong regulations and policies against re-igniting inflation because of the effects of hyper-inflation during the inter-war period. </p>

CC BY-SA 4.0
2019-01-25T08:09:03.630Z
and this forces banks and inverstors to put all the money in certain corners of the economy where they can make some money? But these corners are also not contributing to inflation?
user123124
CC BY-SA 4.0
2019-01-25T08:16:05.390Z
@Maxed: Germany is already a strong economy last time I looked so people are making plenty of money whilst adhering to the Banks anti-inflation strategy.
Mozibur Ullah
CC BY-SA 4.0
2019-01-25T08:17:15.917Z
@Maxed: Isn’t that an argument for extending regulation to tax havens and the like so such reckless policies can’t be pursued?
Mozibur Ullah
CC BY-SA 4.0
2019-01-25T08:20:57.140Z
Thats a complicated question. To many variables,I am just trying to understand the inflation atm. What justice means or is I leave alone for now.
user123124
CC BY-SA 4.0
2019-01-25T20:42:40.290Z
@Mozi the argument that consists in saying that Germany is "afraid" of inflation is, admittedly, widespread. But this argument is only political, not technical... not to say instrumentalized.
keepAlive
CC BY-SA 4.0
2019-01-25T21:00:51.933Z
@maxed: Economics without justice is not economics ...
Mozibur Ullah
CC BY-SA 4.0
2019-01-25T21:03:32.417Z
@kanak: It’s a false simplification that politics is not a part of economics; one of the oroginary names for this discipline was political economy. As for technicalities, techniques and instruments, well we could go into how the Bundesbank sets, monitors and achieves these aims.
Mozibur Ullah
CC BY-SA 4.0
2019-01-25T08:06:01.983Z
2019-01-25T08:06:01.983Z
Mozibur Ullah
<p>I find it kind of odd that we are not experiencing any significant inflation recent years despit the low rates and quantitative easings.</p>

<p>Is there a consensus why this is the case among economists? If not, what are the mos popular explanations?</p>

<p>I am refering to countries in weastern EU and USA.</p>

CC BY-SA 4.0
2019-01-25T10:59:16.017Z
If you are asking about a particular country or group of countries, could you please edit your question to clarify this.
Adam Bailey
CC BY-SA 4.0
2019-01-25T13:34:11.717Z
@Adam Bailey fixed
user123124
CC BY-SA 4.0
2019-01-25T15:26:27.473Z
For the US ... No.
123
<macroeconomics><inflation>
Is there consensus on why inflation is not rising?
user123124
# Is there consensus on why inflation is not rising?

(Asked by: username_0 on 2019-01-25)

I find it kind of odd that we are not experiencing any significant inflation recent years despit the low rates and quantitative easings.

Is there a consensus why this is the case among economists? If not, what are the mos popular explanations?

I am refering to countries in weastern EU and USA.

**Tags:** macroeconomics, inflation
> **Comments:**
> **username_1**: If you are asking about a particular country or group of countries, could you please edit your question to clarify this.  
> **username_0**: @Adam Bailey fixed  
> **username_2**: For the US ... No.  

---

## 2 answers

### Answer by username_3 on 2019-01-25. Score: 1 | Accepted answer

If your question is about Europe, yes there is. Inflation took time to rise because commercial banks have used injected liquidities to consolidate their balance sheet instead of stimulating demands by creating credits (that did not previously exist when they make loans). This is called the [money multiplier](https://en.m.wikipedia.org/wiki/Money_multiplier). The multiplier was *somehow* blocked (to ~$1$) because of their precaution behavior.

On [March 10, 2016](https://en.wikipedia.org/wiki/Helicopter_money#In_the_Eurozone), the [ECB](https://www.ecb.europa.eu/home/html/index.en.html) has even considered the possibility of giving 200€ per month and per person to stimulate inflation. And this with the main idea of circumventing the commercial-bank system. This unconventional monetary policy is called [monetary helicopter](https://en.m.wikipedia.org/wiki/Helicopter_money).

> **Comments:**
> **username_0**: what does "consolidate their balance sheet " consits of?  
> **username_0**: My suspision as a layman is that all the money and low rates went into stocks and real estate thus not getting into "real" inflation driving sectors such as healthcare, food, school and infrastructure. Is that a total missconception?  
> **username_3**: @Maxed I have made a quasi-abusive use of the word "consolidate". What I meant is that the subprime crisis and its consequences have contaminated the Euro-zone's commercial banks through [securitization](https://en.wikipedia.org/wiki/Securitization), interrogating the default risk associated to their assets and liabilities. Injected liquidities have thus often been used to anticipate these potential defaults on the one hand, and also to elevate their fractional-reserve ratios on the other hand.  
> **username_0**: hmm just read something about what happend after the 08-crisis. Ít seams like alot of regluation where imposed on the banks after the crisis. Are you saying that the QE was nessesary or/and used to fullfill these demands imposed by authorities?  
> **username_0**: for example https://en.wikipedia.org/wiki/Basel_III  
> **username_3**: @Maxed. Yes exactly, even if there were other (more delicate) possibilities than benefiting from QE to comply with Basel3: the point is that com.banks could not disentengle the uncertainty associated to the components of their balance sheets from their exposures to liquidity risks, i.e. to the fact that depositors may all want to withdraw their money at the same time... which event characterizes all what liquidity risk is about: fractional-reserve ratios pushed to their max. = [full-reserve banking](https://en.m.wikipedia.org/wiki/Full-reserve_banking) = no liqu.risk. B3 is not as extreme.  

---

### Answer by username_4 on 2019-01-25. Score: 0

I’m not a professional economist so take what I say with a pinch of salt; but my understanding is that the central bank in Germany, one of the strongest central banks in Europe, has very strong regulations and policies against re-igniting inflation because of the effects of hyper-inflation during the inter-war period.

> **Comments:**
> **username_0**: and this forces banks and inverstors to put all the money in certain corners of the economy where they can make some money? But these corners are also not contributing to inflation?  
> **username_4**: @Maxed: Germany is already a strong economy last time I looked so people are making plenty of money whilst adhering to the Banks anti-inflation strategy.  
> **username_4**: @Maxed: Isn’t that an argument for extending regulation to tax havens and the like so such reckless policies can’t be pursued?  
> **username_0**: Thats a complicated question. To many variables,I am just trying to understand the inflation atm. What justice means or is I leave alone for now.  
> **username_3**: @Mozi the argument that consists in saying that Germany is "afraid" of inflation is, admittedly, widespread. But this argument is only political, not technical... not to say instrumentalized.  
> **username_4**: @maxed: Economics without justice is not economics ...  
> **username_4**: @kanak: It’s a false simplification that politics is not a part of economics; one of the oroginary names for this discipline was political economy. As for technicalities, techniques and instruments, well we could go into how the Bundesbank sets, monitors and achieves these aims.  

---

