Another opinion on Inflation

While the Fed has more than doubled its balance sheet to about $2 trillion, a surge in inflation is unlikely given unemployment is the highest since 1983, McCulley said. One policy likely to be used by the Fed involves paying more interest on the reserves banks hold at the central bank rather than taking them back. Some strategists have suggested the Fed will need to soak up the reserves before embarking on a higher interest rate policy as the economy shows signs of expanding.

“I think the monetarists are coming back out of the woodwork, as if the monetary base per se had a direct connection to inflation,” McCulley said. “It doesn’t. It’s certainly hard to argue we’re going to have an overheated economy any time soon, from a starting point of nine, perhaps up to 10 percent unemployment.”

It is downright scary that so many mainstream economists have absolutely no fear of the nearly trillion dollars worth of "high powered money" now sitting there as reserves on banks' balance sheets - they've been so wrong about so many things in recent years, why should this particular issue be any different.
-Paul McCulley of Pimco