I don't the this cause of inflation is settled. Right now it's higher energy prices, in large part caused by the Ukraine war. Then covid recovery caused a big demand increase, and the shipping industry building ever larger ships that can only go to the LA ports on the west coast led to a delivery shortage, which led to a squeeze, then a worldwide shortage of ICs caused auto manufacturers to have a shortage, the Ukraine war even caused wiring harness shortages. It's one thing after another, those were not caused by the Fed or stimulating spending from the government. I'm sure the government giving people money so they wouldn't lose their lives during covid unemployment was a stimulus. But there were all these other things going too.

Yes I agree. There are many causes of inflation. The two principal ones IMO are (1) Supply / demand imbalances (2) Government expansion of the money supply working through the economy.

Canceling Keystone his first day in office doesn't help.

I don't see what that has to do with the current shortage as the main bottleneck is with refining oil, not extracting/transporting it

That obviously did not make a difference now because it wouldn't be in use and the issue seems to be refining more than oil supply.

I think you mean they Keystone XL pipeline. The Keystone pipeline has been running and Biden didn’t cancel it.

Keystone XL is a zombie project which abandoned by the development/infrastructure company. It had been stuck in regulatory review and litigation for a decade.

Environmental reviews by both the Obama Admin and Trump admin state that Keystone XL would not have lowered gasoline prices. You are pretending like all oil/gas products are fungible, when in reality most refineries in the US are not capable of refining all raw product. Hence “Energy Independence” is purely a marketing term and we still need to export lots of raw material and import other kinds of raw material to match what we are capable of refining.

a pipeline that wouldnt even be operational yet?

> Massive government spending, funded by new money, caused inflation.

How is US government spending causing 8% inflation in Germany?

It's almost like this is a global phenomenon caused by supply shocks and price gouging of essential commodities.

It's quite likely that energy prices are the common denominator. Energy inflation is off the charts and is an input to pretty much every other good.

Inflation can be caused by more than one factor…

But that's not really what you wrote, which is what people are pointing out.

>Massive government spending, funded by new money, caused inflation.

Germany deficit spends, too.

France deficit spent more than germany, and have lower inflation figure.

Someday, people will understand that central banks issue less than 8 percent of the circulating money, and that government debt is just another way of financing retirement pension funds.

France is looking pretty smart for going so hard into nuclear power. Conversely, Germany stepped on an energy policy rake.

The US did not have inflation when it did not have fiat money. There's well over a century of monetary history in the US without fiat money.

That's true in exactly the way that disproves your point. Prior to the Federal Reserve era, there were so-called non-fiat currencies, that is, those convertible to silver or gold. Except when they weren't. There were many notable periods of inflation and deflation, and many periods during which convertibility was suspended.

So only in the most narrow sense is it even possibly true that "the US did not have inflation when it did not have fiat money": if you ignore the times when convertibility was suspended, it becomes a slightly more accurate statement, but still not true as it ignores inflation soon after the founding, large deflationary periods in the early and late 1800s, and subsequent inflationary periods prior to WW I. So you have to ignore convertibility suspension and the inflation and deflation in order to argue that there was no inflation or deflation.

The one iron-clad law of "non-fiat" currencies: eventually they will become fiat currencies.

And when they weren't convertible to gold or silver, they were inflated.

This amply proves my point.

The inflation was a net zero from 1800 to 1914.

The ECB printed money too.

> The Fed tells people what they would like the market to be… not what it is.

Fundamentally, you can try to control expectations by feeding biased projections, but you have to maintain a certain signal-to-noise ratio in doing so, or else the market will learn to ignore you. You can feed the market inaccurate projections only by spending down your accumulated credibility, which has to be bought back later with accurate projections.

(This applies in real life, too. It takes trust to be believed, and it costs trust to mislead).

"If a new inflation target is too ambitious, and the central bank fails to attain it, the central bank may lose its credibility, which may render less effective any other policies it pursues." [https://www.federalreserve.gov/econres/notes/feds-notes/rais...]

If the market has learned to ignore the Fed, then it becomes very costly for the Fed to achieve accurate projections and earn back its credibility, because it can't rely solely on influencing expectations to achieve its results. It is left only with backing up its bark with a real bite.

Is that really the case though? I thought inflation is just when stuff gets more expensive, and how it’s caused is complicated. So, it can be increase in demand, decrease in supply, both on the buy and sell side (ie supply/demand of things, including dollars).

I think it’s reasonable to say that the majority of the planet shutting down during the pandemic has at least as much to do with inflation as the fed’s monetary policy, if not much more.

I generally agree with your sentiment.

Resuming economic activity after shut downs (and the habits the shut downs changed) is taking time. There is no obvious natural experiment to tease out how much is caused by CB interest rates and how much is fiscal policy. Most of the countries that did one also did the other.

Also, data points on these issues are gathered monthly (if that often), so current analysis will miss a lot in the “fog of war” until there is more data to analyze.

> The Fed can’t control government spending.

True.

> Massive government spending, funded by new money, caused inflation. The Fed can’t do much about that.

False. The Fed controls the money supply - that is, the creation of new money. (Congress doesn't, thank God.) If the Fed didn't increase the money supply, the government would have to borrow more on the open market, or else tax more. The first might cause visible issues earlier; the second would be politically expensive.

Traditional economics teaches us what you said, but the low inflation environment from 2009-2019 suggests it’s more complicated. The Fed was struggling to even achieve the target +2.0% inflation rate for that entire decade, even as Congress passed gargantuan spending bills every year.

I tend to agree with your sentiment, but wanted to point out there are obvious issues with our analysis.

What are some of the better fed news aggregators?

Most central bank news is terrible. Follow Joseph Wang- @Fedguy12 on Twitter. He’s a former Fed trader with good insights, lots of podcasts. His book, central banking 101 is fantastic, very readable.

Is this the same HK-based fellow on Quora?