As the central bank creates or distributes more money, people don’t suddenly go out and consume goods and services.
Falling or rising interest rates play out where they are the primary cost of doing business: financial transactions.
The chart below shows the relationship between monetary velocity (nominal GDP per dollar of monetary base) and Treasury bill yields, in Federal Reserve data since 1929.
Further increases in the monetary base simply push us further and further to the left, and velocity simply declines in direct proportion to base money.
Further monetary easing or a larger money supply does nothing for nominal GDP.
Inflation emerges primarily from supply constraints or an exogenous shock that reduces supply.
In that environment, the marginal value of goods surges relative to the marginal value of a currency.
Hyperinflation results when there is a complete loss in the confidence of currency to hold its value, leading to frantic attempts to spend it before that value is wiped out.
I don’t think we’re there yet.