The origin of inflation matters.

This tweet reminds us, incidentally, that it makes a difference where inflation enters the economy, particularly in whom it benefits:

bonchieredstate: CBS News just coming right out and saying the quiet part out loud.

If inflation results from an increase in the monetary supply, there’s more money floating around for the same goods and services, and the benefit tilts from the top down (starting with investor types), and effect is everywhere money is spent. If a reduced workforce means businesses have to pay more to attract workers, they have to charge customers more for products that utilize low-skilled labor, and workers with more money will tolerate higher prices on the goods they buy.

Who benefits in the latter scenario isn’t obvious, but the distinction raises two points worth considering.  First, big-government politicians seem to prefer that everything be top-down, including reaping the benefits of their policies.  And second, it’s insane to expect human beings to manage these things as if they’re turning knobs on a control board.

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