[galaxyLogic]

> It goes to the business owner, who just received inflated prices for their goods. They, in turn, usually need to pay their suppliers, who can charge them inflated price

The first business receiving inflated prices does not really affect what their suppliers are charging them does it? When a business makes more money and if there is competition they can afford to sell at a lower price and still make profit. And they can invest in making production cheaper which will eventually decrease prices, one could think.

Good points about why inflation is bad. I was just wondering if it is self-correcting problem then it can not be very bad. It seems like a complicated problem. Except supply-side inflation is easy to understand.

[nostrademons]

It does affect them, but in non-uniform ways. Basically if you are the only one of your supplier's customers that is making more money, you can pocket the windfall as profits. If all of your supplier's customers are making more money, your supplier raises their prices to capture that (modulo the existence of their competitors that might compete to hold prices down). If some of your suppliers customers are making more money and some aren't, or if your supplier has competitors that are willing to underbid them, you split the difference.

Take a look at Bay Area home prices & inflation for a consumer example. When only startup founders were making multi-million-$ payouts, the price of homes remained reasonable. When everyone started making multi-millions, the price of homes rose to multi-million-$ levels.

Inflation, by definition, means that everybody or at least a large segment of the population has more money, so it's closer to the second scenario. The non-uniformity of competition dynamics is part of why some people reported 50% raises in 2021 but other people got nothing, though.