Lower than 2008 t.co/D5MubkBP2b
— Financelot (@FinanceLancelot) November 29, 2021
Perfect example of why cost-push inflation destroys consumer confidence and the high input costs lead to slowing growth, eventually resulting bankruptcies and unemployment rising.
Cost-push bad
Demand-pull good— Financelot (@FinanceLancelot) November 29, 2021
It’s Black Friday, ‘70s-Style. “Strawberry prices go up in the fall because the supply is lower; apples are cheap, because they are abundant. Prices of one good relative to another change, and induce us to shop effectively. That’s normal. Inflation is different. Inflation describes all prices and wages going up at the same time, straining supply throughout the economy. That’s the situation right now.”
Plus: “Widespread inflation always comes from people wanting to buy more of everything than the economy can supply. Where did all that demand come from? In its response to the pandemic, the U.S. government created about 2.5 trillion new dollars, and sent checks to people and businesses. It borrowed another $2.5 trillion, and sent more checks to people and businesses. Relative to a $22 trillion economy, and $17 trillion of existing (2020) federal debt, that’s a lot of money. People are now spending this money, the economy can’t keep up, and prices are rising. Milton Friedman once joked that the government could easily create inflation by dropping money from helicopters. That’s pretty much what our government did.”
Inflation is always and everywhere a monetary phenomenon.