We Still Haven’t Reached the Inflation Finale

[claireokc]

Commentary  Inflations have an inbuilt mechanism that works to burn them out. Government (including the central bank) can thwart the mechanism if they resort to further monetary injections of sufficient power. Hence inflations can run for a long time and in virulent form. This occurs where the money issuers see a net benefit from making new monetary injections even though likely to be less than for the initial one which took so many people by surprise. Ultimately at some point the cost-benefit calculus shifts in favor of the government not blocking the operation of the burn-out mechanism. Let’s try to work out which model of burnout the Great Pandemic inflation in the United States will follow. ...

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