I know that there are complicated economic theories about what determines inflation and wealth and such, and that particularly capitalists love claiming that it's a really complex system, but every time I've looked into that supposed complexity, almost all of it was just proxy metrics for something really simple.
So... is inflation actually influenced by anything *other than* the relation between 'amount of money in the economy' and 'change in wealth inequality'? Or is it just all smoke and mirrors again?
(Please do not repeat economics textbooks at me, I'm looking for a well-reasoned answer that approaches the topic critically, not "everybody knows that..." type answers)
@joepie91 You're saying that if the money supply increases but inflation doesn't go up, it's because the new money is being absorbed by the wealthiest? That sounds like a reasonable theory to me. I did try to find a correlation between *interest rates* and wealth inequality a while back and wasn't able to find one, but I didn't look at the money supply & inflation, just interest rates.
The money supply did increase pretty dramatically before this most recent bout of inflation, but the delay was about the same as past inflationary cycles.
I don't think you can completely neglect exchange rates, since the US imports so much. Or globally exchanged commodities. I think a big reason inflation hasn't been as high in the US as in many other countries is because oil prices have stayed low because global consumption is down, both due to China's economic woes and the deindustrialization of Europe. And maybe Biden giving exploration licenses out like candy, which probably pushed down futures prices.
I've spent a lot of time trying to find a simple explanation for inflation, but this is one I never really considered. I'll need to do some research and get back to you. If you have done any, would you mind sharing links?
@freakazoid I don't have any links, unfortunately - this is entirely original armchair research so to say, running across too many unexplained things over the years that I can only really explain by rolling in these two factors as the explanation.
So it's certainly not a proven theory, just something that pops up Suspiciously Often as a thought, which for me is often a sign that there's something there (even if it isn't always exactly what I was expecting)
