Why may printing trillions of dollars not lead to inflation?

Question

By definition, inflation should be affected by the increase of the money supply. During the pandemic, there have been numerous huge monetary policies executed, e.g., quantitative easing (QE), injection liquidity into the market by increasing the monetary base.
A lot of people say that this will lead to inflation and you have to save your wealth into rather deflationary assets, like gold or bitcoin. However, a lot of economist argue that the picture is way more complex than this. For instance, a supply shock should lead to inflation, but high unemployment should keep it down.
Even if inflation would not be significant in the short term, or significantly higher than the target inflation, why wouldn't there be a huge inflation in the short to mid term?
I know once the economy is healthier, central banks can raise interest rates, and that would slow down the economy and would cause deflation. But, still, this kind of huge money printing could only be cured by very radical interest rate increases, which may not happen at all.

Ole Krarup · Answer

An important subtlety
In the literature, the words "inflation/deflation" are often used to describe "any increase/decrease in the price of a good for any reason". If some kind of crisis causes the value of stocks to drop by 10% and a monetary scheme like QE is implemented to bump the stocks back up by 10%, then some would say that the inflation is zero.
However, it is clear that the stock prices are now 10% higher than they would have been without the injection of money via QE. We could say that the price is inflated relative to a case without such intervention. From this viewpoint, any expansion of the monetary base must be inflationary, since it will always raise the prices of some assets/goods/services relative to the price without the intervention.
One could argue that the 10% drop reflects a real change in the state of the economy (people are more interested in having the funds to see themselves through an immediate crisis than to invest long term), and that injecting more money into the system to prop up the value of stocks that nobody would want to buy in the absence of QE is unnecessary.
To answer your question in short, if one uses the broad definition of inflation, it is indeed possible to do the exact right amount of QE to make sure the price in dollars and cents of assets do not change as a result of the crisis in the short/medium/long term. If one uses the more narrow definition, QE and similar interventions are always inflationary.

Why may printing trillions of dollars not lead to inflation?

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