Who Should We Blame for Inflation

 

While the war in Ukraine has harmed the global economy and is a humanitarian disaster, inflationary pressures had been building for months prior to Russia’s invasion. Broader supply chain disruptions have also been a challenge; however, even with high inflation, we are seeing signs that these issues are easing. Inflation is primarily caused by U.S. Federal Reserve (Fed) policies that have been too loose for too long and continue to be overly accommodative in our opinion. 

The primary source of inflation is the massive amount of fiscal stimulus that has been augmented rather than offset by loose Fed policy.

The American Rescue Plan Act, passed in March 2021, was far larger and more cumbersome than necessary. Passing a $1.9 trillion stimulus package after the US economy had already begun to improve was both unnecessary and foolish. 

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