I think this is slightly misguided, the cost of shipping was what exploded (see link below). It wasn't really a capital destruction as much as logistical issues/spill over from coronavirus.
I've seen so much discussion and threads being overly reductive about inflation, essentially the end prices of goods are a function of their inputs and the competition for those goods. It's important to understand that you have many non-linear effects overlapping to create the final goods price. For example, chip shortages meant inspite thousands of physical cars being finished, they couldn't be shipped for lacking a few components. There's nothing more money can do about that. But cars are essential, so the price of used cars exploded in response.
This is just one example of hundreds of different, overlapping issues that coronavirus brought to the supply side picture. At this point in the picture, much of the service side of the economy was physically shut e.g. you couldn't go to bars. Revenge travel, eating out etc. created a crowding out effect and drove prices higher there when they did open.
The billion dollar question is whether or not we continue to see this crowding / revenge effect or in fact people just have more money than you think and are simply spending it. There's mountains of data on both sides of this debate, if you look at consumer credit it seems to be increasing (people can't afford?), but savings rates also remain stubbornly high (but have money?). In spite of price increases, consumer demand remains very high (look at retail sales) and employment makes new record highs and JOLTS continues to be through the roof.
It's not a simple puzzle as many people seem to suggest.
Logistics got screwed up, I agree. And the increase in the costs of transportation impacts everyone else's calculations and ability to produce. Your chips and cars example is excellent, by the way.
https://www.freightos.com/freight-resources/coronavirus-upda...
I've seen so much discussion and threads being overly reductive about inflation, essentially the end prices of goods are a function of their inputs and the competition for those goods. It's important to understand that you have many non-linear effects overlapping to create the final goods price. For example, chip shortages meant inspite thousands of physical cars being finished, they couldn't be shipped for lacking a few components. There's nothing more money can do about that. But cars are essential, so the price of used cars exploded in response.
This is just one example of hundreds of different, overlapping issues that coronavirus brought to the supply side picture. At this point in the picture, much of the service side of the economy was physically shut e.g. you couldn't go to bars. Revenge travel, eating out etc. created a crowding out effect and drove prices higher there when they did open.
The billion dollar question is whether or not we continue to see this crowding / revenge effect or in fact people just have more money than you think and are simply spending it. There's mountains of data on both sides of this debate, if you look at consumer credit it seems to be increasing (people can't afford?), but savings rates also remain stubbornly high (but have money?). In spite of price increases, consumer demand remains very high (look at retail sales) and employment makes new record highs and JOLTS continues to be through the roof.
It's not a simple puzzle as many people seem to suggest.