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Nathan Tankus @NathanTankus
, 4 tweets, 1 min read Read on Twitter
One of the worst things about the idea that inflation is "too much money chasing too few goods" is it provides no coherent approach to the temporal dimension of this issue. Once you accept that firms order backlogs are a strategic variable this completely falls away.
In other words, we have plenty of evidence of price increases because of cost increases or income changes among customers while order backlogs are extremely low. we also have plenty of evidence of order backlogs fluctuating- and getting elevated- without price changes. 2/N
Firms might raise prices in response to elevated order backlogs- or they might not. you have to qualitatively understand the firm's positionality to understand what's going on. 3/N
Thus price increases happen without "too much money chasing too few goods" and price increases don't necessarily happen when "too many orders" come in. Then the time sensitivity of both customers needs and desires and the "long run" strategic outlook for firms comes into play
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