[dilyevsky]

Then how would you explain ultra low interest rate for 10+ years without associated inflation spike? It was only until double/triple whammy of supply chain disruption/ government handing out cash/ opptunistic price gouging that inflation really took hold

[dageshi]

It caused asset inflation for 10 years.

Housing, the stock market, crypto.

Supply of goods and services could mostly keep up with any increased demand so you didn't see inflation so obviously there.

[throwaway2037]

It is interesting that you include "stock market" in your list. Can you pick a period where the stock market went up (or down) for an extended period that was not "asset inflation (or deflation)"? To be clear, yes, financing rates will always impact financial assets (stocks, bonds, traded commodities) in the short term, but not over a ten year period. You need real earnings growth in the underlying stocks to see sustained stock market growth.

Crypto is gambling to me, so let's ignore that for my post.

Housing is mostly about debt financing (the same is true for commercial real estate). It is always true that financing rates have a large impact on valuations. People mostly buy homes on the monthly payment (cars too). If rates rise, they monthly payments rise. Most people will elect to buy a cheaper home, or wait for prices to fall.

[jml78]

The issue I don’t see talked about is the removal of the reserve requirements for banks during Covid. They did that for liquidity reasons.

However that allows bank A to loan 100% of their money to bank B and 100% to bank C.

This is extremely problematic. And now with bank failures they are too scared to put it back in place.

Just this concept alone creates huge inflation.

[rocqua]

Banks still have a required capital ratio. Covid slackened that a little bit, but banks very much still have reserve requirements.

[mr_toad]

Because the economy was growing as fast as the money supply.

[MrFoxFriday]

low interest rates are not always the result of loose monetary policy; given that the low rates didn't result in inflation, they likely reflected lower real growth expectations or other demand side factors.

[MikePlacid]

Supply chain disruption and opportunistic price gouging are actually SIGNS of inflation, not causes of it. In a socialist country I grew up in the opportunistic price gouging was illegal, so supply chain was ALWAYS disrupted…

So, in your list the only true cause of inflation remains.

[dilyevsky]

Supply chain disruption came long before any inflation showed as a result of covid lockdowns

[MikePlacid]

Our government starting giving away money long before Covid lockdowns.

What is inflation? It’s prices going up. Or quality of service going down while priced the same. What is “supply chain disruption”, now? It is: you should pay more for the same delivery service, or if you refuse - your delivery will be delayed. “It’s not inflation, it’s just supply chain disruption” - was a political slogan then. No need to repeat it now: inflation is officially here already.