Inflation goes away when supply chain issues ease ?
This is the view of many on Wall Street, and this group feels that the only reason there's inflation is because of the supply chain issues, and when they go away, so will inflation issues. This group doesn't want to see the fed raise interest rates, and in fact says, they won't have to if they just wait till the supply chain issues ease up. My view is this
Lets say that this is a possibility, but that the supply chain issues won't ease for 1-2 years. Is the Fed well advised to just let inflation run rampant for another year or more in the hopes that it will one day calm down on it's own ? Of course not ! Why ? Because if inflation keeps going at the pace it is, which is waaaay higher than the 6%-8% yoy the Fed says(I believe it's more like 25%-40% yoy, and will continue at that pace through 2022), as that's a lagging indicator, then the economy will collapse way before the inflation takes care of itself. However I don't agree that the supply chain issues alone are the cause, as the huge trillions in stimulus are also a cause, as is human behavior of wanting to buy now, instead of later, for fear of higher prices.
In other words, inflation left untreated, will kill the economy on many levels, and the fed MUST raise interest rates asap, or we'll be in trouble big time within six months IMO. The markets in the meantime have totally ignored any rate hikes happening at all, yet the 3-4/year that many economists are predicting for 2022-2024.
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