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What's happening: The idea that corporate greed, or "greedflation," is the cause of persistent inflation is making the rounds again, so it's worth reiterating the obvious: there is no such thing as "greedflation."
The facts: Inflation is caused by clear and well-understood economic factors that stem from supply and demand. Prices rise when we have too many dollars chasing too few goods and services. There is nothing more complicated to the story than that.
During the pandemic, we had a limited supply of goods and services coupled with an increase in demand. Prices rose as a result, but that effect was short-lived. It faded once the economy began reopening.
The Fed's role: The more long-lasting effect of inflation is the Federal Reserve's (the Fed) expansion of the money supply. This expansion of the money supply was well above any increase in the size of the economy, hence too many dollars facing too tew goods and services. The persistent inflation we are experiencing now is from that expansion. The slow reduction of inflation coincides with a declining money supply, which takes time to achieve.
This is not to criticize the Fed's COVID-era monetary policy. It had to do what was necessary to stop a financial crisis while the world dealt with a pandemic.
Unfortunately, the timing for unwinding those actions got away from the Fed for a variety of reasons, including how long the virus lingered and the size and timing of the fiscal response to COVID.
So are they saying (admitting) that their economic model is, by its very nature, doomed to turn out this shitty?
What's an economic model that wouldn't suffer severe consequences after a massive pandemic restricted economic activity, and a huge war led to sanctions on a resource that is required for almost all economic activity?
Because, to be clear, we had significant inflation because of a huge injection of cash to buoy up economies during a time when people weren't working, and due to a huge increase in oil prices due to sanctions on Russia.
We could have not done quantitative easing, furlough schemes and so on, but that would have carried other negative consequences!