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Central banks around the world have injected money into the economy at a record pace to try to fight a global recession triggered by the coronavirus pandemic. Just getting word from the Federal Reserve. Bombshell announcement from the Federal Reserve. It is an absolutely historic week both in the terms of the speed of Fed purchases and, of course, the magnitude. Since mid-March, the Federal Reserve's balance sheet has ballooned from 4 trillion dollars to around 7 trillion dollars, equal to about one third of the value of the entire American economy. A new CNBC survey showing that market participants expecting trillions more in stimulus from both the central bank and Congress. At the same time, governments have enacted record amounts of fiscal stimulus to boost economies stalled by the pandemic. The infusion of cash into the financial system has renewed concerns that inflation could surge. As Milton Friedman said, inflation is always and everywhere a monetary phenomenon. If you believe that, you look at the central bank balance sheets exploding right now and you say there's going to be inflation. Supply shocks have driven up prices for some goods over the past few months. Yet recent history suggests inflation is more likely to stay low for a long time as unemployment remains near record high levels and consumer spending is subdued. While this certainly is quite a lot of disruption to the supply side of the economy, that's likely to be dominated by the huge hit to aggregate demand. So how will trillions of dollars of economic stimulus affect the outlook for inflation? Inflation refers to an increase in the prices of goods or services over time. One well-known measure of inflation in the U.S. is called the Consumer Price Index, or CPI. The CPI is about the prices that we pay for services and goods and housing and rent. Economists say some inflation is healthy for the economy. When the economy's growing, more consumers and businesses are out spending money on goods and services. This increase in demand results in higher prices. Demand is an important factor in the outlook for inflation. Generally, when unemployment is high and consumer demand is weak, inflation is low. Another factor that affects inflation is commodity prices. If oil prices rise because there's a cut in production, gas prices might increase too. Consumer and business expectations about prices are another piece of the inflation puzzle. If a lot of people expect prices will rise in the future, they might spend more now, ultimately causing inflation. The level of actual inflation that we get will be pretty heavily influenced by the inflation rate that actors in the economies, households, businesses, consumers, workers, investors expect to prevail. Like many other central banks around the world, the Fed targets a 2 percent yearly inflation rate. At that rate, a cup of coffee that costs 2 dollars this year would cost 2 dollars and 4 cents next year, not quite enough to break the bank. Central...