The summary is that productivity is down, money supply is way up. The value of money, in particular, the strength of the US Dollar is backed, fundamentally, by

The summary is that productivity is down, money supply is way up. The value of money, in particular, the strength of the US Dollar is backed, fundamentally, by the strength of US and US productivity. The problem is that the money printed did not sufficiently go into factors that increased productivity (relative to the money printed) and instead contributed to an asset bubble and consumption (relative to investment in productive capacity). Unfortunately, the Fed has to raise rates to reduce the money supply (increase the cost of borrowing) which puts downward pressure on productivity. This is not a foregone conclusion but is the likely outcome, hence the need to "do more with less" mantra of tech. So while the money supply will decrease, the real question is will the money supply decrease relative to productivity. Otherwise, we are basically in for a stagflationary period unless technologies like LLMs produce a step-function increase in productivity and efficiency. The problem is there is also an inverse relationship between productivity gains due to technology and effort. Meaning technology makes life easier, so people work less, effectively resulting in the same overall output, unless economic conditions dictate otherwise. In which case, inflation may not be a bad thing in the very near short term, provided we can produce our way out of it, which may be possible if LLM technologies result in new industries and job opportunities. (However current thinking indicates the opposite, jobs will likely be eliminated as a result of LLM technologies.