Inflation? And then what?

[Martinjmpr]

The Venezuela hyperbole has gotta stop. This is a not-so-clever sound bite. The USA and Venezuela have zero things in common. Period.

Yeah the Venezuela comparisons make no sense. Same for those who want to compare inflation to what happened in Weimar Germany after WWI.

I don't see this as any kind of sinister plot, but just a "perfect storm" of different events all having a similar effect:

Think about where we were in mid 2020 when it seemed like large sectors of the economy (particularly in the service and entertainment industry) were on the verge of collapse due to COVID.

If you think about it, last year there were a lot of things that people typically spend money on - dining out, movies, sporting events, concerts, etc - that were not available to them. So that money was saved and often not spent on other things.

Travel - for much of 2020 people couldn't travel outside the US, and even travel IN the US was restricted, and often the things that people might travel to see were closed. So, again, that money wasn't spent and it was saved.

People unsure about the economy also pulled their spending back, not sure if they'd have a job or if the economy itself would collapse (as some predicted it might early on in the COVID days.)

COVID shutdowns causing manfacturing of key components causing inventories of available products to plunge.

And finally, the government pumped out money to people in the form of stimulus checks.

Simple supply and demand: More dollars (demand) chasing fewer goods (supply) = inflation.

In theory, at least, once people burn through that money that's burning holes in their pockets, demand will drop and supply will catch up which should slow inflation.

Unfortunately I see some people saying "we need moar stimulus checks!" which would be like trying to fight a raging fire by spraying gasoline on it.