> it is a self-correcting problem because as prices go up people will no longer have as much money.

It’s not as simple as that, and thinking about the second and third order follow-ons is important. History has taught us it goes something like this:

    1. People have more money, so the majority spend it (instead of saving it).

    2. Companies, seeing more demand, but can’t expand supply as quickly, raise prices.

    3. People are feeling good cause their companies are doing well, but wait… we should get a raise and get some of that profit!

    4. see #1.

At some point, this cycle gets out of control and we finally realize “inflation is too high”.

For example, when companies can produce a good at a rate X, they can up prices at rate 1.05X. But suddenly, they run out of resources and can only produce at constant, instead of rate X, but continue to raise prices due to “projected” demand.

You have to break the cycle somewhere, and it’s painful no matter where you start, from unemployment or raise taxes or add regulations.

The US Fed only has 1 tool out of the 3, as congress is the ones with power to raise taxes or add regulation.