Why the Fed's Inflation is not Causing Prices to Rise

Economics Economics Questions
1

In an interview with Scott Horton, Bob Murphy says that:

  1. The Fed gave Wall Street trillions
  2. Banks want to lend that money
  3. Bank lending would cause prices to rise
  4. Bernanke doesn’t want prices to rise
  5. Bernanke pays banks not to lend
  6. Thus, no “price inflation” although massive inflation.
2

How does he pay banks to not lend?

3

I believe that’s a reference to the new practice of the Fed paying interest on required and excess reserves. Here’s the Fed’s press release from last October.

Edit: Aaargh. Sorry, I hit the confounded “suggest an answer” button by mistake. There doesn’t seem to be any obvious way to correct that, or delete the post and start over. [:(]

Edit 2: Ah, some kind mod must have fixed it. Thanks.