A few posts ago, Tim asked the logical question, "With all this printing of money, where is the inflation?" After noodling around on the Interweb Tubes for a bit, I found a consensus among the non-foaming-at-the-mouth commentators that gives us two reasons for the lack of inflation.
The printed money is replacing lost money
When all those loans went pfft! and when the stock market crashed, money simply evaporated. Loans were written down and portfolio values shrank. Money that had existed at one time was no longer there. Much of the printing has gone to refill banks' reserves so we didn't end up with bank runs. A good explanation of this phenomena can be found here.
The lack of economic activity has slowed the velocity of money
It's not how much money is in the system, it's how much money times how fast it changes hands. One of the, err, advantages of Obama's economic policies is that no one knows just what in tarnation the government is going to do next. Whatever it is, it's not going to be good, whether it's Dean's high speed choo choos or insane EPA regulations or ObamaCare's monstrous regulations or Dodd-Frank turning the banks into swamps of pointless government paperwork. No one wants to engage in economic activity. The evidence is here:
All of that printed money is just sitting there right now. If it's inert, then it can't be chasing goods and services and so it can't be contributing to inflation. A good explanation of this can be found here.
Yay! We're saved from inflation!
Err, well, yes, we're saved for now. As soon as a grown up gets back into the White House and beats back the hordes of regulatory cannibals running wild in the streets of DC, we'll see economic activity pick up. If we're still printing money like crazy, we're going to be in for one wild ride.