all on their savings, a hint of inflation is already chipping away at reserves.The Flood of Money from Central BanksOne word from Italian economist Mario Draghi on Sept. 6 was enough to trigger jubilation in the financial markets. "Unlimited," the head of the European Central Bank (ECB) said, along with his trademark crooked smile. What he meant was that the ECB would buy unlimited quantities of government bonds from euro-zone countries if they requested aid from the European Stability Mechanism (ESM), the permanent euro bailout fund that went into operation this week, and accepted the conditions of their euro partners -- a statement Draghi reiterated last Thursday.The ECB has already spent more than 200 billion on government bonds, and now the central bank's balance sheet could continue to swell. The mood in the markets was further improved when the central banks in London and Tokyo also announced their intention to continue their bond purchase programs and, above all, when "Helicopter Ben" Bernanke, chairman of the US Federal Reserve, lifted off for another rescue flight.In a speech in 2002, Bernanke cited economist Milton Friedman, who had once recommended throwing money out of a helicopter to avert deflation, which is when prices decline throughout the economy.Bernanke certainly earned his nickname with his announcement, on Sept. 13, that the Fed would buy up $40 billion in mortgage loans every month to bolster the housing market and stimulate demand. It's the third load of money that "Helicopter Ben" is tossing out over America since 2008. The Fed's balance sheet already contains close to $3 trillion in government bonds, mortgages and other securities.But that isn't everything. The prime rate has been at zero since the end of 2008, and now Bernanke has announced that banks will likely be able to continue borrowing money for free from the Fed until at least mid-2015. "Helicopter Ben" is promising not to land before the American economy takes off and there is a significant drop in unemployment.That may all sound good and well, but it no longer has very much to do with monetary policy.In the eyes of PIMCO executive Bosomworth, Bernanke's approach marks a departure from the Fed's independence. "We are experiencing a 'reverse Volcker moment' in the United States," he says. What he's referring to is this: After the oil crises of the 1970s had driven up inflation in the United States, former Fed Chairman Paul Volcker rigorously combatted inflation with high interest rates. During that period, the Fed emancipated itself from the government's influence. "Today the Fed is increasingly becoming subservient to fiscal policy," Bosomworth says critically.The US government debt has just exceeded the $16 trillion threshold. Inflation could help reduce this enormous mountain of debt. "The alternative is to reform and save -- and to accept higher unemployment as a short-term consequence," says Bosomworth. "But that isn't as attractive politically."Instead, the US government is behaving the way governments have always behaved when their debts have gotten out of hand. The history of money is a history of almost constant devaluations.1| 2| 3NextPart 1: How Monetary Policy Threatens