So if you go back into history when inflation began
to arise after COVID.
At some point people said,
including you, that it was transitory.
In hindsight, what do you think people missed about the
nature of the inflation?
Why was it more enduring than people initially thought?
So these are, this is a question that people will
be writing papers about and debating longer after all of
us are gone.
So, and it's early to say,
it's actually kind of kind of soon to be answering
it,
but I think it's it's.
So here's my answer to that question.
When inflation arrived in March of 2023,
it was really coming out of the good sector and
it was connected to really high demand for goods.
And it was, and, and you know,
the, the supply chains, global supply chains which account for
most manufactured goods collapsed because of too much demand and
because of Covic.
And you know, so it but,
and to us that looked like a temporary fleeting situation.
We also lost several million people out of the labor
force.
So wages went way up as the economy really boomed.
When we reopened the economy and we thought,
you know, there we were getting vaccines were coming in
and we we thought that that would fix itself too.
Kids would go back to school.
We essentially overestimated how quickly the economy would return to
normal.
It finally, these things finally did happen in 2023,
but they didn't happen in 2021 or two.
And what we meant by transitory was that it would
go away fairly quickly without the need for our intervention.
You don't want to intervene with interest rates if,
if something's going to go away quickly without us intervening
because,
you know, monetary policy, as I mentioned,
works with long and variable lag.
So the lore is you look through things like a
temporary oil shock.
So that was the mistake was that it actually,
it actually didn't reverse itself.
The problems with the supply side didn't reverse themselves until
2023 when they really did.
When we got, we got a big burst of,
of employment and, and also the supply chains were fixed.