The inflation we’re currently seeing is largely caused by supply being savaged by Covid and not having fully recovered yet. Demand hasn’t really grown compared to pre-Covid, which if the issue was those “stimmy checks” wouldn’t be the case.
Proving you’re wrong is easy. On one hand sure, supply chains has an effect, but it’s not in the way you’re thinking. To prove you’re wrong, you can see the spike in demand after stimmy checks where given. This is what made economists describe the situation as the “bullwhip effect”:
which was guessed because the stimmy checks is the “free money” that increased demand uncontrollably, which led to inflation. I remember seeing the spike in demand in Target financial reports after stimmy checks arrived. These chains had an unexpected spike in demand and revenue in these times. If it’s supply chains like you’re saying, this wouldn’t have been the case.
The bullwhip effect refers to perceived demand, not actual demand. And if perceived demand is larger, suppliers would act to increase supply, which suppresses inflation, not causes it.
Instead we saw supply shortages well before any stimulus checks were passed, and we saw further supply shortages after demand for oil for example absolutely cratered. The impact of this on various supply chains is still being felt everywhere.
It’s also dead-simple to prove that demand hasn’t suddenly spiked due to stimulus checks, because if you look at a graph of US household savings, you’ll notice those jump up at a couple points, and those jumps happen to be roughly equal to the size of the total stimulus package. Which very strongly suggests Americans used the stimulus checks to pay off built up debts and to put the rest into savings. These graphs are available online, feel free to Google it.
Furthermore, inflation was at its peak well after the stimulus checks had ended. This was due to a normalization of demand to pre-covid levels, whereas supply still needs time to go to those levels.
Savings going up and demand going up are not mutually exclusive. Your assumption is simply wrong.
Of course inflation will have a delayed effect. Did you expect this to happen overnight? What logic says that you give stimmy checks and you see the result overnight in a multi trillion dollar economy?!
You literally argued that demand spiked after the stimulus checks and therefore caused inflation? And now you’re arguing “oh this demand spike didn’t have an effect at the time but it does have one after a year of no more stimulus”?
Make up your mind. Either stimulus directly impacted demand so severely that it causes severe inflation, or the “demand spike” you asserted with nothing but anecdotal evidence did not cause inflation but is somehow now causing prolonged inflation. Instead of, you know, the vastly more likely and by experts agreed upon cause of covid-induced damage to supply chains. Which also conveniently explains supply shortages and why demand is barely at pre-covid levels.
But I’m sure your misinterpretation of various economic terms is the more likely cause.
There are tons of economic factors that have delayed effects, especially like money printing. Read about the cantillon effect. Inflation takes time to trickle into the economy.
The inflation we’re currently seeing is largely caused by supply being savaged by Covid and not having fully recovered yet. Demand hasn’t really grown compared to pre-Covid, which if the issue was those “stimmy checks” wouldn’t be the case.
Proving you’re wrong is easy. On one hand sure, supply chains has an effect, but it’s not in the way you’re thinking. To prove you’re wrong, you can see the spike in demand after stimmy checks where given. This is what made economists describe the situation as the “bullwhip effect”:
https://en.wikipedia.org/wiki/Bullwhip_effect
which was guessed because the stimmy checks is the “free money” that increased demand uncontrollably, which led to inflation. I remember seeing the spike in demand in Target financial reports after stimmy checks arrived. These chains had an unexpected spike in demand and revenue in these times. If it’s supply chains like you’re saying, this wouldn’t have been the case.
The bullwhip effect refers to perceived demand, not actual demand. And if perceived demand is larger, suppliers would act to increase supply, which suppresses inflation, not causes it.
Instead we saw supply shortages well before any stimulus checks were passed, and we saw further supply shortages after demand for oil for example absolutely cratered. The impact of this on various supply chains is still being felt everywhere.
It’s also dead-simple to prove that demand hasn’t suddenly spiked due to stimulus checks, because if you look at a graph of US household savings, you’ll notice those jump up at a couple points, and those jumps happen to be roughly equal to the size of the total stimulus package. Which very strongly suggests Americans used the stimulus checks to pay off built up debts and to put the rest into savings. These graphs are available online, feel free to Google it.
Furthermore, inflation was at its peak well after the stimulus checks had ended. This was due to a normalization of demand to pre-covid levels, whereas supply still needs time to go to those levels.
Savings going up and demand going up are not mutually exclusive. Your assumption is simply wrong.
Of course inflation will have a delayed effect. Did you expect this to happen overnight? What logic says that you give stimmy checks and you see the result overnight in a multi trillion dollar economy?!
You literally argued that demand spiked after the stimulus checks and therefore caused inflation? And now you’re arguing “oh this demand spike didn’t have an effect at the time but it does have one after a year of no more stimulus”?
Make up your mind. Either stimulus directly impacted demand so severely that it causes severe inflation, or the “demand spike” you asserted with nothing but anecdotal evidence did not cause inflation but is somehow now causing prolonged inflation. Instead of, you know, the vastly more likely and by experts agreed upon cause of covid-induced damage to supply chains. Which also conveniently explains supply shortages and why demand is barely at pre-covid levels.
But I’m sure your misinterpretation of various economic terms is the more likely cause.
Demand spikes, inflation takes time. Don’t act dumb.
There are tons of economic factors that have delayed effects, especially like money printing. Read about the cantillon effect. Inflation takes time to trickle into the economy.
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Two reasons: