Fact-Checking “Greedflation”

"Price changes aren’t solely driven by changes in suppliers’ minimum willingness to accept. Changes in demanders’ maximum willingness to pay (the demand schedule) also play a role. But consumers face a budget constraint: increased spending in one area implies reduced spending elsewhere. Some prices may rise, but others will fall. Changes in consumer demand may explain relative price changes, but cannot explain a sustained increase in the general price level.

For the general price level to rise, consumers must be able to increase their willingness to pay for goods in general. That occurs when the central bank injects excess money into the economy. By fueling an overall increase in demand, central banks can generate a sustained increase in the general level of prices — inflation. Central banks are the primary source of money creation, not firms. Unlike greedflation, central bank behavior can explain high and persistent inflation."

- rest of article at Fact-Checking “Greedflation” | AIER