This is part 2 of a series. The first part is here.
The first installment of this series revealed (though of course it is not a novel recognition, either in general or on these pages) that there can be general price increases that don’t arise from inflation, such as those caused by supply shocks. It reviewed why the distinction between inflationary and non-inflationary general price increases is so important: namely, because what is generally taken to be the right remedy for inflationary price increases – Federal Reserve rate hikes – can’t possibly be the right response to non-inflationary general-price increases, as that’s just raising yet another price.
The question now becomes: Are the current galloping price increases of the inflationary or non-inflationary kind?
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