I know very little about inflation. Today I am only writing to get some thinking out so that it can be a base on which to build. My current knowledge can be summarized by, “Too much money chasing too few goods”.
My current thinking is that companies like Amazon and TSMC making capital investments that are larger than several years of previous investments will increase supply. US consumers spending more on services with goods purchasing starting to decline will reduce demand on constrained supplies. I suspect that some of the inflation fears will be abated.
On the other hand, there are more jobs than people looking for jobs, and corporate profits are stronger than before the pandemic. Wages don’t drop over time. Some company’s profits have come from rising prices more than rising costs. Both of these observations seem to suggest sustained costs/inflation.
My current forecast is that inflation will be higher than the previous decade going forwards, but not as large as current CPI estimates and not are large as feared. I suspect the recent sell-offs are overreactions, and there are buying opportunities.
But I am well aware that I don’t know what I’m talking about, and I’m not placing money on the forecast.