The Fed Was Dead Wrong

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The Fed failed to recognize the danger of its loose monetary policy in 2021. We are seeing its pernicious effect, as the money supply and velocity combined to inflict non-transitory inflation.

Most people think the nation's money supply is the sole cause of inflation. But they fail to realize inflation has two equal dance partners: the money supply and its velocity, or the rate at which money circulates.

The money supply is shrinking for the first time since at least 1960. Yet, despite the most significant decline in the money supply in 60 years, and likely since the Great Depression, inflation remains sticky.

How can that be?

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