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Comment by purple_ferret | Hacker News Reader

The idea that more cash has driven up the price of basic goods this quickly is almost certainly frivolous. The pressure simply isn't there, especially with wages still so low.

That's not to say prices haven't been suppressed over the years in various ways that combat normal inflation (6oz denim Jeans that are now 10% Spandex I'm looking at you) and there's a ton of money in the system that have mostly went into assets.

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Prices aren't up because people are bidding more for finished goods. Prices are up because commodity costs are up, so the inputs to production cost more. Those costs are passed onto end consumers, to the extent they can afford them, or they are passed on in the reduction in the availability of goods.

It's not just more cash (increase "demand"), it's also reduced supplies due to many businesses shuttering or reducing output during covid.

GDP only dropped 2.3% last year [0], so there's approximately the same amount of stuff to buy.

[0] https://www.bea.gov/news/2021/gross-domestic-product-4th-qua...

My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess.

You explicitly blamed distribution of trillions to the populace, which I think is the conclusion the article's author wanted people to come to.

Your response illustrates the likelihood that the article is a stealth attack on government stimulus to the non-rich, to deflect the possibility of more straightforward solutions, like curtailing stimulus to the rich.

> My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess.

You're looking at the total supply (which is true in the long term, since those dollars have to be spent eventually). However, inflation in the short term has much more to do with velocity and actual spending - if all of that money just sits in bank accounts, there will be no inflation.

So looking at the money supply in isolation will tell you nothing about the actual inflation. It's about what's happening to that money.

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