[neilwilson]

It's less clear than that - because this is a supply side issue.

Inflation is prices going up. Prices go up when somebody selling something realises there are insufficient competitors and they can mark up pretty much as they please and still clear their inventory.

The solution is more competitors, which requires fiscal policy to move people from producing for consumption to producing for investment. Because the market won't do it on its own. It's too busy making a killing.

The problem the West has, that the Chinese don't have, is we have developed a visceral dislike of politically selected investment. Those extracting rents from supply constrained markets love that of course.

The price of the belief that investment can only be private is that the Chinese will ultimately win out.

[kelipso]

Plus consolidation/monopolies/duopolies/etc means the initial investment has to be significantly higher to be competitive in the market. Or it's just impossible to enter the market in the first place for the same reason.

[ephbit]

> The solution is more competitors, which requires fiscal policy to move people from producing for consumption to producing for investment.

This generally sounds reasonable.

It implies, that there are some (unnecessary) bottlenecks somewhere in the production chain of highly requested goods that can be alleviated by shifting workforce and capital from somewhere else, where there's overproduction or superfluous capacity to where the bottlenecks are. The allocation of resources isn't optimal. Right?

So which are these obvious misallocations of resources/workforce that ought to be corrected by suitable fiscal policy in your opinion?

[Etrnl_President]

Inflation is the artificial increase of the money supply; The government spends the new money with corporations, *at the original value*, using up resources. Those resources are now missing and will need to be replaced in the market; This demand now increases the price of those resources, and everyone else who doesn't get freshly printed digital money shoved up their butt by the government, now has to pay those *raised prices* to overcome the unnatural draw on the economy you get from using an inflationary fiat currency system.