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Even though President Joe Biden and his spokespeople continue to blame inflation on Vladimir Putin, as we have explained previously, the primary cause of inflation is always rapid increases in the supply of money. This is Economics 101.
We can’t make it any more simple than this: Historically, the output of goods and services has averaged about 3% per year. When the supply of money increases much more rapidly than 3% annually, which it has in the past two years, there will be too much money chasing too few goods. This always leads to higher prices — because demand (people with money to spend) outstrips supply (the inventories of goods to purchase).
Likewise, there are some who charge that increases in government spending cause inflation. The validity of this proposition depends on how the increase in spending is financed.
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