Contrary to popular belief, inflation does not naturally result from a government that "prints money" on its own and inflates the money supply. Economic activity is a combination of both the supply and velocity of money. If I print a dollar and put it in my wallet, I have $1. If I use it to buy a newspaper at a newspaper stand, and the guy who runs that stand uses it to get a haircut, and the barber uses it to buy groceries, then we have $4 in activity from my original $1.
When the Fed engages in a massive program of buying mortgage-backed securities from banks and brokerage houses, it isn't really "creating money" at all. It is buying bonds that are backed by money that has already been created -- in many cases created years ago. Since many of these are non-performing mortgages in default or foreclosure, the purchase by the Fed is the only thing that gives them any value at all.
Without this intervention, the whole system would collapse. This is not to suggest that it was ever a good idea to write those mortgages in the first place, but once the loans were extended, there was no good way to unravel the mess that had been created.
“then we have $4 in activity from my original $1”
Wrong. You assume it was the dollar that did that.
It was individual labor and desire that did that. Money was only the exchange rate.
Had you put that dollar in your pocket and the fed went and printed 3 more, you’d only have 1/4 the buy value you once had and the newpaper guy doesn’t want $1, he now wants $4. Thank the fed for that.