AI Snips
Chapters
Transcript
Episode notes
Reopening Imbalances Drive Price Surge
- The 2021 price surge reflects uneven reopening frictions rather than a single cause.
- Supply constraints and input shocks like energy explain much of the headline inflation.
Energy And Supply Aren't Fed Tools
- Energy and sector-specific factors matter a lot and are largely independent of the fed funds rate.
- Monetary policy can't directly restore physical supply or drilling capacity in the short run.
Use Rates To Curb Demand, Not Fix Supply
- Consider using monetary tightening to moderate demand rather than to fix supply problems.
- Higher rates can dampen borrowing, risk taking, and spending to take pressure off prices.