Key Points
- Commerce Department indexes that the Fed relies on heavily for inflation signals showed prices continuing to climb at a rate still considerably higher than the 2% annual goal.
- The stubborn inflation data raised several ominous specters, namely that the Fed may have to keep rates elevated for longer or even have to hike at some point.
- Thus far, the economy has managed to avoid broader damage from the inflation problem, though there are some notable cracks.
What caused receny inflation? That is easy. It’s caused by many things including supply chain disruptions, lack of competition, war, and non-existent government oversight.
Whatever the reason, they are making more money and workers are producing more than any time in history. So back to your point, companies need an excuse for their price gouging. The money supply is their biggest scapegoat. They also blame theft and high wages. But none of those arguments hold up to scrutiny.
What scrutiny? Your only criticism of the widely accepted, evidence backed idea that putting money into the economy is a cause of inflation seems to be that companies you don’t trust are supposedly saying it, but that isn’t scrutiny of the idea itself.
If you accept that markets are real, and that supply and demand works roughly the way it is understood to work by the field of economics, it should be very straightforward why adding money causes inflation; in dollar terms, it increases demand, while supply stays the same, moving the equation towards higher prices. There is disagreement about whether all forms of adding money cause inflation; I’ve heard reasonable arguments that the money supply itself is not important but rather the velocity of money and whether people who will spend it are getting it is what matters, which I’m not sure I fully agree with, but since we’re talking about government spending, that is well known to be one of the most direct forms of economic stimulus and those arguments don’t apply.