The assets &#x2F; paper that the Fed were buying in QE2 was pretty much anything banks wanted to throw at them. Though again, the <i>auction</i> element basically meant that less-utterly-grotty-stuff won out over the truly utterly grotty stuff, again, if I&#x27;m getting my story straight.<p>Inflation has to do with money chasing goods.  All you&#x27;ve said is that &quot;money wasn&#x27;t chasing goods&quot;. Which gets us to two further questions:<p>1. Why wasn&#x27;t that money chasing goods (or real, economically productive, investment opportunitys, by which I specifically <i>exclude</i> financial derivatives or simply &quot;buying&quot; tax sheltering).<p>2. What <i>is</i> that money chasing?<p>As I understand, the answers don&#x27;t do much to make the situation any less bad.