• angarabebesi
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    3 年前

    I disagree. Inflation is driven because of back-to-back supply shocks: covid restrictions (still ongoing) and the sanctions against Russia.

    • ☆ Yσɠƚԋσʂ ☆OPM
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      3 年前

      These things contributed, but printing money like mad while keeping the interest rates low is the core contributing factor. As the article explains:

      The main cause of the US inflation is its aggressive monetary and fiscal policies. In the first half of 2020, the Federal Reserve launched massive quantitative easing, which pumped hefty amounts of money into the market.

      From May 2020 to March 2021, M1-a narrow measure of money supply that covers cash in circulation and current deposits-surged more than 300 percent on a monthly basis on average, and M2, which covers cash in circulation and all deposits, rose more than 20 percent, which has fueled the rise of prices in the US.

      In terms of fiscal deficit, data from the US Treasury Department shows that the country’s fiscal deficit was $3.13 trillion in fiscal 2020 and $2.77 trillion in fiscal 2021, the highest and second-highest in history. The deficit-to-GDP ratio was 15.2 percent in 2020 and 12.4 percent in 2021.

      The large amount of money pumped into the market by the Fed has been used to buy government bonds to make up for the fiscal deficit, and the fiscal spending has gone into the pockets of residents and enterprises in the forms of subsidies and allowances, which has contributed to the rebound of market demand. However, supply capacity has not recovered at the same pace as demand, resulting in a gap between demand and supply, which has driven inflation higher.