Re:FDIC set to take First Republic Bank into receivership
by trashtester on Saturday April 29, 2023 @05:35AM
(#35751463)
> inflation is either from excess demand or constrained supply
Inflation is always about the balance between supply and demand
> the reasons for inflation matter when trying to address the problem
Less than one might think based on the either or thinking. Even when a change in supply causes inflation, reducing the demand side will bring it back down.
The exception being for specific items where demand is not very elastic in the short term, such as fuel or basic food items.
But even increasing interest rates (a demand side intervention) may not affect those prices by much, it will affect other prices enough that aggregate demand can stay low.
Inflation is always about the balance between supply and demand
> the reasons for inflation matter when trying to address the problem
Less than one might think based on the either or thinking. Even when a change in supply causes inflation, reducing the demand side will bring it back down.
The exception being for specific items where demand is not very elastic in the short term, such as fuel or basic food items.
But even increasing interest rates (a demand side intervention) may not affect those prices by much, it will affect other prices enough that aggregate demand can stay low.