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Russian Gas Cutoff Symbolizes New Era of Supply Shocks and Inflation
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Inflation is the result of demand growing faster than supply. Central banks can deal with the demand part. The problem is that the world they confront in coming years might be one of recurrent supply shocks.
The decades preceding the pandemic were characterized by chronically weak demand and a seemingly limitless supply of capital, labor and raw materials, resulting in persistently low inflation and interest rates.
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