Government spending, or over spending, is the primary driver of inflation. If we can control that inflation will slow. There are some prices that skyrocketed recently ($5/doz eggs) and those falling back to normal levels is not a protent of depression.
I didn't say the current prices are a potent of a depression, just that lower prices doesn't always indicate a enjoyable outcome.
Gov spending is one factor but not the only one.
What actually causes inflation (at a high level)
Inflation happens when aggregate demand persistently exceeds aggregate supply or when production costs rise broadly. The main drivers fall into four buckets:
Monetary conditions (money & credit)
Supply-side constraints
Demand shocks (public and private)
Expectations & feedback loops
Government spending lives in bucket #3 — important, but not dominant on its own.
Friedman always believe inflation was primarily a Monetary phenomena and not gov fiscal spending though many factors contribute.
For instance the German hyper-inflation was not caused by excessive gov spending, it was from losing workers and production capacity. (i.e. Supply Shock).
The recent inflation was cause by 20 years of deranged loose money supply.
Started under Greenspan.
Exploded during GFC bailouts and later COVID checks. Soon to be exacerbated further with Tariff Checks.
Too much free money chasing a limit supply of goods that also was already suffering a supply shock due to COVID disruptions. The egg thing was a bird flu phenomena (i.e. Supply Shock).
