Bigger picture, China’s recent lockdown and supply chain strife is almost the last domino to fall, so to speak. Over the past year, global supply chain issues have been easing. And in some cases, things seem to be back to pre-pandemic levels. If supply chains are running smoothly, that means there’s greater supply — a strong driver of deflation. And as this continues to improve, inflation will become less and less of a problem.

And for the first time in 16 months, the inflation rate in the United States dropped on a month-over-month basis. Based on the trends I’m seeing, I think that will persist. And I believe the pace of this deceleration will shock a lot of people.

And in fact, the circulating supply of U.S. money has fallen back into a historically normal range since the pandemic’s emergence. This is a sign that demand is moderating. The stage is set for massive supply growth and demand destruction, which will lead to rapidly decelerating inflation. I think that by mid-2023, we’ll be back to 2% or lower inflation rates.

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