Inflation, Money, and Supply Bottlenecks

New 100 USD bills are applied with a serial number, a U.S. Federal Reserve seal, cut, and stacked at the U.S. Bureau of Engraving and Printing's Western Currency Facility in Fort Worth, Texas, on Oct. 11, 2013. Brendan Smialowski/AFP via Getty Images

Commentary

One of the arguments most used by central banks regarding the increase in inflation is that it’s because of bottlenecks and that the recovery in demand has created tensions in the supply chain. However, the evidence shows us that most commodities have risen in tandem in an environment of a wide level of spare capacity and even overcapacity.