Credit is produced. It’s never in excess despite what the neo-Austrians contend about the Fed creating excess through the banking system. Markets aren’t that stupid, and they know the Fed has no credit to extend.
Monetarists claim inflation is born of too much money in circulation, which imagines markets to be incredibly stupid. Monetarists then profess an ability to slay inflation by planning the “supply” of money. More realistically, credit and money flows are market phenomena that no one person or thousands of people could plan. Despite this, the view is that the Fed can fix inflation via price controls. It can’t, nor would restraining credit or so-called “money supply” have anything to do with inflation as is. The latter is just a decline in the monetary unit.
This is notable in the aftermath of 525 basis points of hikes. The dollar is even weaker. No surprise there. The inflation fight was a non sequitur, not to mention that the higher prices had nothing to do with inflation. The wonder is if the various economic religions will ever accept that the fastest path to lower prices isn’t Fed rate fiddling, rather it’s spreading production across as many hands and machines as possible. The division of labor was eviscerated to varying degrees in 2020 and beyond. There’s your higher prices.
The problem, as always, is that command-and-control is not inflation.
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