what inflation

nothing to see here move along

Correct me if im wrong, but isnt that the definition of inflation and is pretty much the only part?

MV=PT

M = Money Supply
V= Velocity of circulation
P= Price Level and
T = Transactions

Velocity of money plummeted during the pandemic, and the increase in the money supply takes time to filter throughout the economy (it's been said 9-18 months). The low velocity of money is what's been keeping inflation in check, but as supply chains rebound, it will increase.

How is amount of available goods and services factored into that equation? Is this an accepted model?

Yes but as supply chain issues get fixed it will increase supply which will decrease price levels.

Pretty much all real economists agree that the current inflation is caused by the supply chain issues restricting supply more than the money supply increasing. Our money supply hasn't actually increased all that much. The M1 and M2 supply increases have been largely driven by movement from restirement funds to checking accounts as the government removed penalties during the pandemic.

This post was edited by NetflixAdaptationWidow on Dec 16 2021 02:03pm

This model is adapted from Milton Friedman's monetarist theory of inflation.

https://www.economicshelp.org/macroeconomics/inflation/monetarist-theory-inflation/



Monetarists are real economists too. Friedman won a Nobel Prize in it.

For now, the money supply didn't increase nearly as drastically as the supply chain has restricted goods and commodities.

The model can be sound but your interpretation isn't. The supply chain has raised price levels by restricting supply and increasing cost to acquire goods. That is a much more direct cause than the increased money supply, which was mostly from moving money from investment accounts.

I've seen people say "40% of the money was printed in the last two years!". No. The M1 supply increased because money got shuffled from M4.

This post was edited by NetflixAdaptationWidow on Dec 16 2021 03:08pm

i wouldnt say quantity is going down.

This post was edited by Unbornsav on Dec 16 2021 03:08pm

It's a formula for inflation, not a full on explanation of extenuating circumstances.

M went up 40%. M2, to be precise, mostly through government stimulus payments, and the Federal Reserve with 120 billion/month in bond/MBS purchases.
V went down 27%.

You wouldn't believe any of us if we told you. It is obvious that you already have preconceived biases.