Make no mistake, over the next several months and through the summer, data for economic growth, and particularly for inflation, will be explosive, but a surging money supply does not primarily cause the increase.
A series of several idiosyncratic factors are contributing to an explosion in the rate of inflation, all of which will prove temporary or transitory in several years.
First, consumer spending patterns changed suddenly and forcefully. The radical shift from consumption of services, which require little to no inventory, to durable goods created a worldwide squeeze on raw materials and parts.
Second, a rapid demographic shift from cities to suburbs caused a one-time surge in housing demand which amplified the demand for durable furnishings.
Thirdly, this surge in demand for durable goods and the need for an abundance of raw materials is colliding with damaged supply chains due to varying COVID lockdowns and social distance policies.
Lastly, the comparative base effects over the next several months set up for a large spike in year-over-year inflation without the added pressure of the first three points.
This cocktail of a rapid change in consumer demand on a worldwide scale into damaged supply chains is leading to a forceful surge in the price of goods. Note the surge in prices is not in both goods and services, but rather only goods.