https://archive.ph/Tu6r9 https://archive.ph/Tu6r9 Last 3 paragraphs: Jason Furman, an economist at Harvard University who served in the Obama administration,

https://archive.ph/Tu6r9 https://archive.ph/Tu6r9 Last 3 paragraphs: Jason Furman, an economist at Harvard University who served in the Obama administration, argued in a recent academic journal article that inflation in 2021 is best explained by stimulus that dramatically raised nominal income, which, through the fiscal multiplier process, generated an explosive rise in nominal demand. That rise in demand exceeded what the economy could supply on such short notice, especially given disruptions caused by Covid-19. The gap between excess demand and constrained supply showed up as sharply higher prices. While Mr. Furman’s analysis doesn’t use the money supply, it resembles the quantity theory of money in relying on nominal demand to forecast inflation rather than unemployment, as the Fed’s models now do. Indeed, some economists have suggested the Fed should target a stable growth rate of nominal demand (more precisely, nominal gross domestic product) instead of inflation because it doesn’t require a judgment on whether excess demand or supply disruptions are pushing up prices. With such a target, the Fed would have begun tightening monetary policy sooner, said David Beckworth, an economist at the Mercatus Center, a think tank. It is possible, Mr. Furman said, that using the gap between nominal demand and the economy’s supply-side capacity to forecast inflation only works at times like last year when the gap is so large. The same might be true of big increases in the money supply. Still, it is worth noting that money-supply growth this year has plunged. If the monetarists are right, perhaps that means inflation will, too.