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It's an economic riddle playing out in real time: What if central banks printed huge supplies of money, and no inflation came?

The Federal Reserve Board has spent four years injecting more than $3-trillion (U.S.) into the U.S. financial system through a series of debt-security buying programs collectively known as quantitative easing (QE). The basic concept has been to stimulate economic activity by increasing the money supply.

The big fear was that this would eventually fuel rampant inflation. Standard economic thinking goes that with considerably more money available to chase the same goods and services, prices inevitably surge.

But it hasn't happened. Thursday's U.S. consumer price index numbers showed inflation at a puny 1.6 per cent in January, its lowest level in two years – even as the Fed's monetary-policy committee shows growing divisions over whether continued QE poses undue risks to the U.S. economy.

The story isn't much different in Europe or Japan, where central banks have also engaged in copious QE programs. Inflation in Britain and the euro zone is tame, and has been trending downward. Japan's consumer prices are in deflation.

The issue, perversely, is that all that central bank money hasn't really increased the money supply much at all. At least, not where it matters to the broader economy, and by extension, to inflation.

"In reality, money growth has not been particularly brisk," said CIBC World Market economists Avery Shenfeld and Emanuella Enenajor in a report published Thursday.

The narrow measure of U.S. money supply – the M1 – has, indeed, expanded by a substantial 12 per cent over the past year, but this measure largely reflects money held by the Fed, the U.S. Treasury and by financial institutions (the banks). But the broadest measure of U.S. money supply, the M4, is up only 6 per cent over the same time, and has only recently started accelerating after showing little or no growth for much of the economic recovery. Pointedly, M4 has only just made it back to its level prior to the financial crisis.

"There's a mile to go to catch up to its pre-crisis [growth] trend," the CIBC report said.

This divergence reflects the fact that the U.S. banks still aren't lending – a reflection both of their reluctance to free up credit and their need to build up their reserves, and the continuing deleveraging in the U.S. economy that started with households and businesses reining in debt, and is now shifting to governments. Bloomberg reported this week that the big U.S. banks are lending out the smallest proportion of their deposits in five years. The Fed's money is stopping at the banks, rather than passing into the broader economy.

"The money's not staying in the system," said Bank of Nova Scotia economist Derek Holt.

In a recent report, Mr. Holt and colleague Don Zigler wrote that for every nickel the Fed has pumped into the financial system through QE, "nearly a nickel is coming right back to the asset side via excess reserves."

But the minutes from the most recent Fed policy committee meeting, released this week, show increased nervousness among committee members about the continuing wisdom of QE. The fear would seem to be that the Fed is piling more and more money behind this dam in the lending system – and that one day, the dam may burst.

Paul Ashworth, chief U.S. economist at Capital Economics, said the Fed has a system in place to control the reserve balances in order to keep the broader money supply from a sudden spike. However, he said, the sheer scale of the funds now on the Fed's balance sheet raise questions about whether this will be easier said than done.

"Nobody has ever tried to do this on this scale before," he said. "In theory, all of this works, but the difference between theory and practice is sometimes quite important."

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights.

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