inflation - merely a symptom

Like a runny nose, which is often a symptom of viral diseases, high inflation is merely a symptom.  

So what is the sickness that has put our current inflation at 9%/yr? It's really pretty basic - the sickness is a money supply that was boosted upward too far too fast.  This was done in order to keep our economy afloat during the covid19 pandemic.  (We're not alone in this, the EU and many other Western countries did the same.)

In March 2020 (the start of the pandemic) M2 money supply was $15.5T. Today, just 2 years later, it is over $6T higher than that. This represents a 40% increase. (Most of this $6T is represented by the $4.5T rise in the FED balance sheet since March 2020.) 

Economics 101 says that if one increases the supply of money the value of the currency will diminish in inverse proportion.  In our 40% case this says the value of the dollar would diminish by about 30% .  

Economics 101 also says, that in an ideal supply/demand economy, this drop in the value of the currency will be immediate.  But real economies are far from ideal.  It takes time for the new value of the currency to settle in.

Right now that is exactly what is happening. The new value of the US dollar is "settling in".  For the goods and services we buy in our daily lives, the value of the dollar has, in just 1 year, dropped by 9% (the past 12 month's inflation rate).  

With insufficient responsible action by authorities, inflation could just keep running high until the value of the dollar drops enough to negate the money oversupply. 3.5 yrs at 9% annual inflation would  do the trick. 

Sadly, I think this is likely pretty much what will happen.  Sad for 3 big reasons: 

1. There will be significant hardships for people on fixed incomes because they will have 30% less annual income after 3.5 years of 9% inflation (same number of dollars per year, but each dollar will be worth 30% less); 
2. People who depend on job wages for their expenses will see significant shortfalls - because wages generally do not inflate as fast as goods and services;
3. People with retirement savings will see the real value of their savings eroded away by 30%.