Inflation by the Numbers

Policy Error

Demand-Side Inflation and Helicopter Money

Supply-Side Problems

The Limitations of Monetary Policy

Fiscal Tightening

Rare Opportunity

The Holidays and Washington DC

Milton Friedman famously said inflation is “always and everywhere a monetary phenomenon.” He was right but that short statement doesn’t fully explain how inflation works. It has other causes, too. The period in which he did his most famous research showed inflation was clearly a monetary phenomenon, but I’m not sure he would make the same assertion today.

Last week’s What Really Caused Inflation letter generated an unusual number of questions and comments. That tells me I need to go a little deeper. We know inflation by the higher prices it generates, but exactly how it flows through the economy isn’t always obvious.

Before we begin, let me note we have reopened the Alpha Society to new members, as we do once a year. You can read more about it at the end of this issue. Now, on to our topic.