|New Federal Reserve research finds that well-understood economic factors stemming from supply and demand caused inflation. This led economic analyst Kyla Scanlon to conclude on a Bloomberg Opinion social media video, “Greedflation wasn’t really a thing.”
Why it matters: This lines up with what I wrote in May: “Prices rise when we have too many dollars chasing too few goods and services. There is nothing more complicated to the story than that.”
Inflation was spurred by trillions of dollars of stimulus from federal government spending and easy money policy from the Federal Reserve. Both were necessary to sustain the economy during lockdowns.
- Add supply chain disruptions and we saw fewer goods available which drove up prices.
Bottom line: Analysts and politicians would be wise to avoid simplistic narratives and stick to facts and solid reasoning in the future.