IESET.
Hypotheses·monetary·qe_base_money_cpi_transmission_failure

US Federal Reserve post-2008 QE expanded base money roughly 4x without triggering broad-money expansion or consumer-price inflation until 2021, contradicting the quantity-theory mechanical transmission.

SUPPORTEDengine/runs/qe_base_money_cpi_transmission_failure

SUPPORTED — monetary base rose 4.0x from Aug-2008 to Dec-2019, while CPI/base pass-through was 0.06 and M2/base pass-through was 0.32.

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether monetary base is actually linked to better or worse cpi inflation from 2005 to 2021.

plain answer

The data clearly moved in the predicted direction. monetary base rose 4.0x from Aug-2008 to Dec-2019, while CPI/base pass-through was 0.06 and M2/base pass-through was 0.32.

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 2005 to 2021, using a local projections design.

what was measured
What changed
  • Monetary base
  • Fed balance sheet total assets
What we checked
  • Cpi inflation
  • Cpi core inflation
  • M2 money stock
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/qe_base_money_cpi_transmission_failure
1007550250200520132021USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show cpi_inflation across 1 sampled countries over 2005–2021.
The shapes above are stylised — none of the lines are real data.
Placeholder for qe_base_money_cpi_transmission_failure. Published chart will be generated from engine/runs/qe_base_money_cpi_transmission_failure/chart_data.json.

Who has skin in the game — schools predicting on this

2 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Chicago School Monetarismwins if MIXEDpartial/no-callModern Monetary Theorywins if SUPPORTEDschool supported

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-05-03T10:43:54Z

US Federal Reserve post-2008 QE expanded base money roughly 4x without triggering broad-money expansion or consumer-price inflation until 2021, contradicting the quantity-theory mechanical transmission.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Primary descriptive test compares August 2008 to December 2019, avoiding the COVID fiscal/inflation regime shift. It is supported if the monetary base expands by at least 3.5x while CPI/base cumulative pass-through is below 0.20 and M2/base pass-through is below 0.50. It is refuted if CPI/base pass-through is at least 0.50 or average CPI inflation exceeds 4% annualised over the same window. December 2020/January 2021 is reported as a sensitivity but not the primary window.

formal test & threshold
test:      fred_base_money_m2_cpi_pass_through_2008_2019
threshold: support if base >=3.5x, CPI/base pass-through <0.20, M2/base pass-through <0.50; refute if CPI/base >=0.50 or annual CPI inflation >4%

Method

Template
local_projections
Clustering
episode
Sample
1 countries · 2005 – 2021
Evidence type
associational

Stub-level estimator pin for runnability audit. Local-projection IRFs of US CPI and M2 to monetary-base shocks at h = 1..36 months over 2008-2021. Compares observed peak response against quantity-theory- implied proportional pass-through. Falsification rule and variables block remain to be filled when this stub is promoted from draft.

Data

VariableSourceTransform
cpi_inflation
outcome
fred:CPIAUCSLtier 1
pct_change_yoy
cpi_core_inflation
outcome
fred:CPILFESLtier 1
pct_change_yoy
m2_money_stock
outcome
fred:M2SLtier 1
log_diff
monetary_base
treatment
fred:BOGMBASEtier 1
log_diff
fed_balance_sheet_total_assets
treatment
fred:WALCLtier 1
log_diff
output_gap
control
oecd:OECD.ECO.MADtier 2
level_pct
unemployment_rate
control
fred:UNRATEtier 1
level_pct
oil_price
control
imf_pcps:POILBREtier 1
log_diff
fed_funds_rate
control
fred:DFFtier 1
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

qe_base_money_cpi_transmission_failure

Verdict: SUPPORTED — monetary base rose 4.0x from Aug-2008 to Dec-2019, while CPI/base pass-through was 0.06 and M2/base pass-through was 0.32.

Primary Window

  • Monetary base multiple: 4.04x.
  • M2 multiple: 1.97x.
  • CPI multiple: 1.18x.
  • CPI/base pass-through: 0.060.
  • M2/base pass-through: 0.318.
  • Annualised CPI inflation: 1.49%.

Sensitivity

  • Through Jan-2021, CPI/base pass-through: 0.039.
  • Through Jan-2021, M2/base pass-through: 0.286.

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Origin is auto-generated coverage-gap stub seeded from MMT framing of post-2008 base-money expansion as decoupled from broad money and CPI until 2021, contradicting mechanical quantity theory. v2 pins a transparent descriptive pass-through test using local FRED vintages.

Authored framework. Read the transparency note.