The Fed's most recurring lament over the past 8 years, ever since the Financial crisis, is that there has been no measurable inflation in the US economy when using such conventional indicators as CPI, even though according to recent measurements by PriceStats real inflation, not the BLS' seasonally-adjusted, goalseeked and politically convenientmutant, is now running at a blistering 3.6%, the highest in five years.

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That however has not stopped Fed members such as Williams to declare idiotically that since there is "no inflation", it is the Fed's duty to run policy "too hot" to spur inflation:

• WILLIAMS: RUNNING POLICY TOO HOT TOO LONG WILL SPUR INFLATION
• WILLIAMS IF INTEREST RATES REMAIN LOW FED NEEDS TO "THINK HARD" ABOUT STRATEGIES LIKE A HIGHER INFLATION TO BE SURE ITS INFLATION GOALS MET

Unfortunately, since the Fed - which several years ago canceled tracking M3 because "it was too expensive" - can not afford to buy a subscription to a service such as PriceStats, here is a simple answer where all that runaway inflation the Fed has created since the financial crisis courtesy of trillions and trillions in central bank liquidity, has ended up. Even better, the answer comes from the Fed's favorite FDIC-backed hedge fund: Goldman Sachs.

To wit:

This has been no ordinary bull market. Set in the context of the Global Financial Crisis, and despite the many ongoing concerns around political events and secular stagnation (and at times fears of deflation), equities have achieved phenomenal returns by any standards. As we have long discussed, much of this has reflected the impact of the very policies employed to prevent a deflationary trap in the aftermath of the Great Recession of 2009. Central banks moved rapidly to cut interest rates to record low levels and, before long, supplemented this with extraordinary monetary policies including QE. The results were clear to see: while consumer prices (and other measures of inflation in the real economy) were disinflating, the generous policies of the central banks resulted in rapid inflation of financial asset prices (Exhibit 1).

The impact of QE has been felt across the financial landscape; rather unusually in an economic recovery (since the recession of 2009), bond markets also have enjoyed extraordinary returns alongside equities. Much of this can be explained by monetary policy and QE influences together with global disinflationary forces.

And while the clueless economists of the Fed and other central banks keep focusing on the right part of the chart, especially the "US Wages" bar, where their policies have unleashed asset bubbles is on the left, in places like European and US High Yield, and of course the S&P500.

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So the next time, clueless hacks such as Williams or Dudley, whose only goal in life is to make products and service for ordinary Americans cost far more than they do now, lament the lack of inflation, please show them this chart from Goldman, and advise them that in order to stimulate "real economic" inflation, they will first have to burst the hyperinflation in "asset prices." Something tells us the commercial banks that own the Fed (recall "Bernanke's Former Advisor: "People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned") may not find that trade off particularly enjoyable.