"As the world’s economies began to recover from COVID-19’s reduced oil usage, renewed oil production did not keep pace. This lack of oil production, not low-interest rates or “excessive spending,” caused today’s inflation." "Today’s critical shortages are food, housing, computer chips, shipping, baby formula, lumber, labor, and other goods. Today’s shortages are not caused by increased demand."

Instead, the Fed intervened in the repo market by doing what it does best, burying a problem with more money until it goes away. It did this by supplying repo to the primary dealers directly and reserves to the banking system via Treasury bill purchases. Unfortunately, the Fed made a critical design error in its daily interventions. They are offering to supply repo to the dealers at prevailing market rates. In other words, they are giving the dealers every incentive to take repo from the Fed as opposed to the market.