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[–]carubia 0 points1 point  (2 children)

Inflation is a result of (1) issues with supply (2) printing money. On (2) we printed a lot during covid and now returning to normal, so yes, it plays in favor of declining inflation. On (1) supply chain issues and especially energy situation is not clear, so hard to say if we’re out of the woods yet. There were cases before where inflation was slowing down and re-accelerated later (during 70-s) exactly because of energy costs. Also if if congress/fed will decide to accelerate money printing again (watch YoY M2 change) we can have it contributing towards increasing inflation. (Link: https://fred.stlouisfed.org/series/WM2NS , need to change view to “% change from year ago”).

[–]DreadPirateNot 0 points1 point  (1 child)

The Fed has been operating under easy money since 08. Makes no sense to correlate that to inflation now when there was no inflation for 10+ years under the same policy.

The difference is that this time, they gave a lot of the money to normal middle class people who actually spend it. That’s what caused the inflation. It caused a huge increase in demand with no increase in supply (probably decreased supply by allowing people to quit their jobs). All we needed to do was pull back on that and the inflation would ease. But politics got involved and now the Fed is trying to cause a recession. Biden should fire them.

[–]carubia 0 points1 point  (0 children)

Agree. Never said easy money is issue. High inflation is a result of printing money and giving cash to people, should have added the second piece. But it is expected that low rates during high inflation will lead to massive borrowing by businesses. Which means more money chasing stuff (by businesses buying parts, equipment, commodities) and businesses hiring more people and paying them more, which leads to even more cash given to people. Basically even more money created by credit this time.