Fed says no worries about inflation

As you may know, the Fed has created brand-new dollars out of thin air which it has used to loan the US government money. That is, we've been paying our national bills using dollars still wet with ink (figuratively speaking). Dollars straight off the metaphorical printing press. You might even call them counterfeit dollars.

Countries which engage in this generally devalue or destroy their currencies. But the Fed assures us it's okay:

Fears of inflation because of the Federal Reserve’s massive quantitative easing measures are overblown, because the Fed has the ability to pull the liquidity out of the market fast enough to prevent price rises, William Dudley, New York Fed president, told CNBC Monday....

Many analysts have warned the measures carry a high risk of inflation....

“My view is that we have tools to manage our balance sheet so that we’ll not have an inflation outcome,” Dudley told CNBC. “We’re far along in terms of having the interest on excess reserves and, just in case, developing other means of pulling out the excess reserves.”

I'm reminded of Fiat Money Inflation in France (pdf of text here), in which the author discusses the precautions and the care with which the French politicians first engaged in money printing. These men were not idiots, and they believed they had built in mechanisms that would prevent the newly printed money from being inflationary. Just like Mr. Dudley of the New York Fed.

It would be a great mistake to suppose that the statesmen of France, or the French people, were ignorant of the dangers in issuing irredeemable paper money; No matter how skillfully the bright side of such a currency was exhibited, all thoughtful men in France remembered its dark side. They knew too well, from that ruinous experience, seventy years before, in John Law's time, the difficulties and dangers of a currency not well based and controlled. They had then learned how easy it is to issue it; how difficult it is to check its overissue….

It was no mere attempt at theatrical display, but a natural impulse, which led a thoughtful statesman, during the debate, to hold up a piece of that old paper money and to declare that it was stained with the blood and tears of their fathers....

Whatever may have been the character of the men who legislated for France afterward, no thoughtful student of history can deny... that few more keen-sighted legislative bodies have ever met than this first French Constitutional Assembly.

Or, in short, "the best laid plans of mice and men...."