In March 2021, Federal Reserve Chairman Jerome Powell said, “[T]hese one-time increases in prices are likely to have only transient effects on inflation.” From then on, “transitory inflation” became the phrase of the year in economics, with high hopes that once the initial supply chain shocks and government stimulus after the onset of the pandemic wore off, inflation would return to its regular scheduled programming and maybe even deflate.

It turns out, however, that trillions of new dollars in stimulus and slashing interest rates to near-zero for a prolonged period of time did not make inflation “transitory.” Instead, it became a new chapter for the economy.

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