The "inflation dog" is locked up in bank vaults!

The IMF recently described inflation as the "dog that did not bark". It pointed to structural unemployment  (which lowers competition in labor market and thereby attenuates deflation) and anchored inflation expectations (due to the high perceived inflation fighting credibility of central banks) as being responsible for muting both deflation and inflation.

There will obviously be disputes about how accurately this reflects the underlying reality - Alok Sheel has a good analysis of other equally compelling factors. Amidst all this speculation we forget that the extraordinary quantitative easing has left no signatures of inflation. This FRED graphic shows that in the US an exploding monetary base has been accompanied by relatively stagnant stock and velocity of M2 money.

And if we add consumer lending, commercial and industrial loans, and commercial paper to the M2 stock and monetary base, the underlying lack of demand becomes painfully obvious.

Atleast for the time being, the "inflation dog" appears safely locked up in the vaults of banks! But do I see the M2 stock inching up or is it just a squiggle?