I'm pretty wiped from the whole "refrigeration guy in midsummer" routine, so my filter is down. Buckle up, because the entire situation makes me pretty salty.
It's not like nobody saw this coming - everybody with eyes saw it coming.
It's not just the stimulus money that's driving this (although several hundred billion washing into the economy certainly helped push it along) - it's the Federal Reserve's absolute "see no evil, hear no evil, speak no evil" monetary policy accelerating entire segments of the economy into legitimate hyper-inflation. I work in such a segment.
Consider building supplies. All the talking heads and article writers made all kinds of (idiotic) observations about people doing all kinds of home improvements during the lockdowns, and opined that this was why a single sheet of 3/4" OSB cost as much as a stack of them did last year.
I suppose home improvements drove some small part of the price increases, but building grade lumber is not used by Ted and Candi building a swingset for Cale. LVLs, 2x12s, and stacks of ugly OSB are used by one group of people - homebuilders. Homebuilders in this part of the world cannot begin to keep up with demand. People care not a whit that their material will cost 2-4x what it did a year ago, because the cost of the money they are borrowing to buy them is insanely cheap. They (rightly, in this economy) figure that a hard asset purchased with somebody else's money at a rate of interest almost assuredly lower than the rate of inflation is a no-brain way to build wealth, AND live in a nicer home.
So yeah, lumber mills had a hard time restarting (we can at least partially blame the enhanced unemployment benefits for that)... but once the feeding frenzy was on, it was a way for mills, wholesalers, and lumber yards to take the profit they had been denied in FY2020. The Fed seemed unconcerned, and tagged inflation as a tangential concern - an anomaly soon to be rectified by the market.
And so it goes across entire industries. In the case of the refrigerant that costs 3.8x what it did a month ago - there was one single plant making one specific gas that had a hard time getting workers to show up (if you've ever worked in a chemical plant, it's not hard to figure out why). Anyhow, they announced they weren't taking new orders until October, and jacked up their wholesale price. Again - this is one manufacturer of one specific gas.
Other manufacturers followed suit. We kept buying the gas because we need it to make your homes cool, and it's summertime. You kept paying it because well... it's summertime. And the contagion spread. Mr. Biden announced we were back in the Paris Accords, which sent all the 400-series gases (410a, 404a, 407a, 407c) through the roof. 134a and 507 were hard on their heels, and then it became a jail-break. Chemical plants aren't even pretending to have slowed production, they're just raising prices because there are no market forces stopping them. I bought a jug of R410a in May for $92. It costs nearly $500 today (I checked).
Wall Street hits new highs every day because the Fed is still buying securities and working very, very hard to keep interest rates near zero. There's nowhere else to go with money, and people are buying the market on margin (because, "why not? it's free money"). Up and up it goes with new highs every day. PE ratios don't matter any more, apparently.
Corn is trading at $6/bushel, and is being used to feed cattle trading at $150. Once the cattle on the hoof makes it to market, no sane rancher is going to replace his herd - he'll go get a job at Farm King until this blows over. Cue 2022 when your T-bone will be running about $30/lb because nobody is left in the game.
And so it goes. Over and over and over. Bitcoin and other crypto-currency increase in value by 10x, then slip back to only 5x their value a year ago. Pan-based speedster replicas sell on BaT for 2-3x what they cost to build. The bread aisle is oddly cleared out at WalMart.
We cannot keep pumping (fake) money into the economy and expecting prices and the supply-chain to remain stable.
As I said the other day, I think Jerome Powell has been sniffing glue with all his Fed buddies in the boy's room down at the Fed Board of Governors meeting - as they signal that maybe, if Cancer is in alignment with Capricorn, and the muse is upon them, sometime in 2023, they might (maybe) start to tighten monetary policy
... hopefully before we are a Banana Republic.