The Evolving Understanding of Inflation and Its Implications.
Economists are rethinking their understanding of inflation, which they previously believed was caused by too much money chasing too few goods. In the 1970s, inflation was driven by rising wages, leading to a wage-price spiral. However, in 2021, wages have not kept up with inflation, and economists are now concerned about a profit-price spiral. This new spiral occurs when companies raise prices to maintain their profit margins, leading to further inflation.