Understanding inflation made simple: if you blow too much air into a balloon, it bursts. If you drink too much alcohol, the toxicity gives you a headache and can kill you. If you create too much money, its value diminishes and it takes some multiple amount of it to buy anything.
During the pandemic the Federal Reserve threw money into the economy by buying trillions of dollars worth of corporate bonds and lowering the interest rate below the inflation rate, while the federal government wantonly threw untargeted money at the economy. The price, not value, of everything goes up while the value of the dollar heads the opposite direction.
For a more sophisticated glimpse of the details, please view “Age of Easy Money” at www.PBS.org/frontline for analysis and interviews of billion dollar money managers, some believing that an event of a lifetime is happening.
