What I meant by saying that "monetary policy can finally translate into higher CPI readings" was that as I'm seeing it, if money that has been flowing into other assets up till now begins to flow into commodities as well, this will ultimately push up the price of goods measured by the CPI because the cost of the raw materials used to make those items will be being pushed higher as well.
So by way of investors using "printed money" to now invest in commodities as well, monetary inflation finally appears in the CPI, which it hasn't really up till now.
From what I've observed, the CPI has only started moving now that fiscal policy has begun to be used, as this gets money to the everyday consumer. Prior to that (with monetary policy being used on it's own), the CPI hadn't moved much at all.
Movements in the CPI are what the conversation on whether "inflation is here" or not seems to centre around currently. Whether saying that a movement in the CPI constitutes a true movement in "inflation" or not is very debatable of course, but rightly or wrongly it's the number that everyone is looking at and getting excited about.
There's been inflation in many things that aren't measured by the CPI there's no doubt about that, but up until the Covid-19 fiscal packages we hadn't seen the CPI numbers move much at all post-GFC.
This idea of investment-driven capital flows into commodities is about the only way that I've seen up till now where QE money might finally make the CPI number move (because in that case it's investors buying the commodities pushing the CPI up, rather than consumers using fiscal policy related "cheques" to pull the CPI number up). With the post-GFC QE in various countries, we've only really seen investment-related assets moving up, but not really the CPI.
@Infose you mentioned secular stagnation, globalisation, neoliberalism, the opening of the door for developing countries to compete, etc.
Yes, exactly.
And so QE hasn't done anything at all to push the CPI number up, but has only really caused asset inflation and no growth (to get onto another topic).
The only thing to move CPI has been fiscal policy, because finally some money has reached the consumer.
The only way that I can see for the QE to move the CPI is if some of that QE money begins to make it's way into commodities (as well as all the other assets that have seen rampant inflation (inflation that is not measured by the CPI)).
