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A plane provides lift while flying which then counter-acts gravity pushing it down - it stays at the same altitude. Increasing money supply & lower prices can h
by seadan83 3y ago
A plane provides lift while flying which then counter-acts gravity pushing it down - it stays at the same altitude. Increasing money supply & lower prices can happen at the same time.
Though, my understanding is that the post-pandemic inflation was driven by (A) a supply crunch [1], & (B) increased profit taking [2]. For (A), recall that boats were queued up off of LA with a months long backlog - there just wasn't the stuff available for people to buy. For (B), see [2] as a reference which states corporate profit contributed "a lot" to inflation in 2021
Then (C), a war broke out with a major energy producer as one of the participants. This pushes global prices up, particular energy prices which then increase transport and all other costs.
As far as (D), money printing; my understanding is that really is yet to be seen what kind of impact that would have and it will take some hindsight to know. It looks to me like this point is overall a subject of active debate (so, we don't really know the impact of money printing just yet).
[1] https://www.kansascityfed.org/research/economic-bulletin/corporate-profits-contributed-a-lot-to-inflation-in-2021-but-little-in-2022/ https://www.kansascityfed.org/research/economic-bulletin/cor...
[2] https://www.usbank.com/investing/financial-perspectives/market-news/supply-chain-issues-contribution-to-inflation.html https://www.usbank.com/investing/financial-perspectives/mark...