We keep hearing that supply-chain disruptions are causing the “temporary” price inflation that has become the hot topic of conversation. All sorts of public enemies are being blamed for the disruptions, including, according to President Biden, those who are manipulating the markets and price gouging. The politicians, meanwhile, are pressuring the ports to frantically intensify their cargo handling and promising that the newly passed trillion-dollar infrastructure spending will get the supply chain rolling again.

That’s not the real story though. While supply-chain problems are pushing up prices by creating an imbalance between what people produce and what they want to consume, inflation has causes that go far beyond this issue.

Since 2007 the U.S. central bank, the Federal Reserve, has created $8 trillion (equal to the GDP of one-and-a-half Japans) out of thin air. Of course, for that increase in the monetary base to cause price inflation, other factors need to be present (and not be present): Namely, people need to spend that money and the production of goods and services must not grow fast enough to neutralize those new dollars.

In recent years, reeling from the 2008 financial crisis and decades of profligacy, people and corporations (and the banks themselves) have opted for prudence. Sure, some of the created money was channeled to assets that saw their prices rise, but what is commonly known as inflation was moderate.

All that was needed for this to change was for the “animal spirits” to come back to life. Now they have—and the result is that prices went up 6.2 percent on an annual basis in October. Although labor shortages have helped push wages up too, people are getting poorer because wages have gone up at a slower pace than prices (no more than 5 percent).

If we add to this the fact that the 10-year Treasury is yielding around 1.5 percent, you can imagine what this inflation means for the millions who have their current or future money in pension funds, the Social Security trust fund, or insurance companies, which invest in that “risk-free” asset to protect the value of their assets.

Supply-chain disruptions indeed exist. But these were not sudden natural catastrophes. They were the result of politicians reacting to the pandemic by drastically tying the hands of producers and of those who move products from one place to another. Even so, the imbalances in many of the areas of the economy would have occurred sooner or later without the pandemic.

In the energy sector, this is all too evident. It’s a sensitive area today since gasoline prices, which have gone up by more than 60 percent, have politicians strutting and fretting their hour upon the stage (and howling against “price gouging”). Non-OPEC countries have seen their oil reserves come down significantly because of underinvestment in traditional sources of energy, and shale oil wells are becoming depleted at a faster rate than new high-grade reserves are coming online. Since for several years much emphasis has been on clean renewable energy, oil companies (including ExxonMobil, Chevron, Royal Dutch Shell, and Total) have not been able to invest sufficiently in traditional sources of energy to maintain their reserve levels and production although the demand for energy, principally from emerging countries, has exploded. Oil and gas prices, therefore, would have gone up with or without a pandemic—in the era of inflation we are now entering, all the more so.

This is but one example of how various areas of the economy present imbalances partly driven by recent political decisions. But underlying everything is the frantic creation of money that is now coming onto a market in which production cannot keep up with demand.

To make matters worse, for all their posturing the politicians have a vested interest in keeping inflation going. The reason is simply the almost $30 trillion debt. Imagine what would happen to the servicing of that debt if the authorities let interest rates go up significantly! They can’t. Diluting the debt requires major inflation. It’s been like that since kings debased gold coins to help pay for wars.