When people claim inflation is caused solely by greed, as if that’s something new…
They need to go back to the Solow model.
First of all, it implies that companies were not profit maximizing before 2020 and have bursts of generosity. So the leftist take is that companies are sometimes charitable and not greedy in our capitalist system? Interesting.
Let’s look at this in the short run.
Then, if people wanting to make more money is not the cause of inflation because that doesn’t go up and down with volatility, what does theory say? It’s supply and demand. Aggregate demand and aggregate supply work together to change prices. Change of prices is all inflation is.
To those who are saying how it is just money supply, well, they are wrong. If they were right we would see a 1 to 1 correlation between money supply and inflation. Problem is… we just don’t see that in the REAL WORLD (TM). Money supply can indirectly influence the aggregate supply curve in the money market with how the money market interacts with the IS (investment-saving) market, which includes the stock market and all investments in the economy, eg bonds, private equity, grandmothers helping grandchildren buy houses, etc. Money supply and money demand (the LM market) impact interest rates together with the IS market where the interest rate and GDP intercept changes the GDP of the economy. So money supply is one input in a good equation to predict GDP, not price level. Price level is also an input in determining your money market, which is based on real money supply. It cannot be both an input and an output. Math doesn’t work that way.
Put GDP into your aggregate demand and aggregate supply chart, and now you find your output is your price level. Change of price level is inflation.
So yeah, inflation is not caused by money printer go brrrrr, neither is it simply because people become more and less greedy over the short run. The short answer is aggregate supply and aggregate demand. The long answer is the Solow-Swan, or even better the Mankiw-Romer-Wile model.
If we look at the long run the model is different because it readjusts and in the long run money does not make an impact on GDP because the economy readjusts, but it does have an impact over the short run.