raghu wrote:
It is hard to imagine that a "substantial demand shift" is simultaneously underway across all possible commodity classes (oil, food, metals), asset classes (stocks, real-estate) and even services (college tuitions, medical care). It seems to me that a monetarist explanation (i.e. money supply increases) is much better than a supply/demand based explanation.
the "monetarist" explanation does not make any sense without supply & demand. There can easily be a world-wide aggregate demand increase without an increase in the money supply. After all, these days corporations often do transactions using government bonds (T-bills), which are not part of the money supply.
The CPI does not seem to support a monetarist theory but if I am not mistaken, the CPI conveniently excludes food, energy, medicine and just about any item that cannot be imported from China.
the CPI does NOT exclude food, energy, or medicine. Maybe you're thinking of the "core" CPI, which excludes volatile energy and food prices as a effort to gauge the trend of inflation. It does not exclude medicine, because medicine prices are not volatile. Rather, they simply ratchet up (until there's some significant institutional change). -- Jim Devine / "The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side." -- James Baldwin
