Another Way to Think about Inflation

Source: National Review
by Kevin D Williamson

Inflation really means an artificial increase in the money supply beyond what is demanded by economic growth, though we mostly use it to mean a general rise in consumer prices. And it is sometimes useful to keep that distinction in mind: For example, there is some reason to think that years of efforts at economic stimulus have, by flooding the U.S. economy with cheap money, contributed to skyrocketing prices for assets and commodities even while most consumer goods trucked on at their usual moderate rate of price increase. … Higher interest rates can knock back inflation because they slow down and interrupt economic activity — which might be desirable from a macro point of view but isn’t exactly a barrel of monkeys if your business is one of the ones that gets the pointy end of it.” (06/02/21)