You hit on an important point: the undersupply of goods.
While classic monetarist theories hold that inflation is all about too much money, the reality is that the severest inflationary episodes are catalyzed by supply side shocks. This was true even in the 1970s.
The catch 22 is that spending to increase the supply of goods gooses both de…
You hit on an important point: the undersupply of goods.
While classic monetarist theories hold that inflation is all about too much money, the reality is that the severest inflationary episodes are catalyzed by supply side shocks. This was true even in the 1970s.
The catch 22 is that spending to increase the supply of goods gooses both demand AND supply -- meaning it can easily end up making inflation even worse.
However, it is certain that interest rate hikes do nothing to address the undersupply of goods.
I'd say you have a better grasp of the issues than the "experts" at the Fed.
Thank you, but these days that does not seem to be a very high bar. I’m guess I’m just frustrated. Every “anti-inflation” action that the fed or government has taken (interest rate increases; higher taxes) to date suppresses production/supply and just makes the situation worse. Government is the cause of the problem and not the fix.
You hit on an important point: the undersupply of goods.
While classic monetarist theories hold that inflation is all about too much money, the reality is that the severest inflationary episodes are catalyzed by supply side shocks. This was true even in the 1970s.
The catch 22 is that spending to increase the supply of goods gooses both demand AND supply -- meaning it can easily end up making inflation even worse.
However, it is certain that interest rate hikes do nothing to address the undersupply of goods.
I'd say you have a better grasp of the issues than the "experts" at the Fed.
Thank you, but these days that does not seem to be a very high bar. I’m guess I’m just frustrated. Every “anti-inflation” action that the fed or government has taken (interest rate increases; higher taxes) to date suppresses production/supply and just makes the situation worse. Government is the cause of the problem and not the fix.