It happened and is happening due to supply chain issues. This is why we will not overcome this inflation cycle with interest rate hikes. Instead those actions will crash they system and cause everything to freeze-up.
If the fiat currency cannot be converted into tangible assets, inflation will continue. We do not hear much about the supply chain at this point as it has become “common,” to see empty shelves of this or that, no chips for cars, no feed for farm animals, worldwide droughts, China’s no-covid lockdown policy. Tangible assets in this case are your everyday common items, not the gold or silver. Sucking the fiat currency out of the system doesn’t resolve the supply chain problems, it makes things worse because there is no capital to produce.
It really is simply about supply and demand. When there is little supply to meet demand, the price inflates.
The Fed and government are tackling the wrong thing with interest rates hikes. In the post-covid year(s), we should be moving to shore up our economy with production and bringing it back home. Oddly enough if you think about it, this is what President Trump was doing. He understood the fragile global supply-chain. Covid revealed many production weaknesses in our own national safety. Everything from the electronics we use to the medicines we need and the food we eat.
Produce the oil
Produce the energy
Produce the rice
Produce the wheat
Produce the chickens and process them in the United States
Produce the corn
Produce the computer chips
Stop complaining about the inflation and start asking why it exists. Why are the price of eggs so high? Why is milk so high? Why is gasoline so high? Why is diesel so high? The answer to all of these questions is the broken supply chain.
Solid thoughts, but I reject the supply and demand explanation, too.
I do so primarily because I reject all “laws” of economics and finance — because they are not gravity or electromagnetics or anything physics.
They are about and measured by that substance created from nothing, money. How can anything created from and defined by nothing qualify to have a “law”?
Money’s value is decided by the imagination of counterparties. So not only is it created from nothing, it’s value is determined by whimsy.
So no, not a supply and demand devotee.