Congressional action made it worse. They literally injected another three trillion dollars of infrastructure spending into an already heated economy.
How exactly is the fed suppose to fight the government printing presses?
How exactly is the fed suppose to fight the government printing presses?
The cause of inflation is an increase in the cost of goods and services.
This is a choice that individuals within companies make. It is not a natural consequence of increasing the money supply.
Price adjusters within companies are using the news of the increased money supply to gamble that customers will pay more and they've been right, so far.
There's quite a bit of tacit collusion driving this, of course, but it's also a self-fulfilling prophecy. Price adjusters within companies know that everyone believes that printing money "causes" inflation, so they take advantage of the opportunity.
If your point is simply that businesses are choosing to maximize profit, that of course is correct. It always has been unless you are a non-profit or state owned enterprise.
The salient question is what conditions changed in the economy so that they can increase prices.
It isnt like they were running as charities before.
Agreed.
> If your point is simply that businesses are choosing to maximize profit, that of course is correct.
My point is pedantic and political. I don't like humans being removed from the equation.
Framing inflation as a natural consequence of increasing the money supply is one way to do that.
The widespread thinking that "businesses exist to maximize profits" is another. (Yes, I'm aware of obligations to shareholders in corporations, but that's beside my point.)
Removing humans from the equation makes abuses just palatable enough to go down.
I would be curious to hear how you think economic interactions should work.
> it is the definition of inflation
Doesn't the definition of inflation have more to do with the decreased value of currency? There are plenty of uses for currency outside of the purchase of goods and services.
If buyers have cash piling up and companies magically decided to hold prices, the cash would just flow into whatever could be still be bought, probably housing.
In reality, the only thing that puts downward pressure on prices is if people cant afford them.
How would this decrease the value of the currency?
It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide.
>It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide.
I cant relate to this idea of an absurd housing surplus. It simply doesn't match m understanding of reality. Housing prices have gone through the roof almost everywhere people want to live.