That makes assumptions that don't hold in the round. Once you have a lack of supply capacity such that there is inflation, then everybody can pass on the price

That makes assumptions that don't hold in the round. Once you have a lack of supply capacity such that there is inflation, then everybody can pass on the price changes and the amount purchased doesn't change. That's the problem. Somebody has to stand the loss, and for that to happen there has to be an expectation that you can't pass on the price shift somewhere in the cycle, which then forces that somebody to reduce the quantity purchased or shift it to an alternative supplier.