Inflation, Oil, Money, And The Missing Piece Of The Puzzle
Insisting on a unitary theory behind inflation, whether oil prices or monetary policy, risks missing important factors behind it.
Luis Gonzalez | August 1, 2026
Inflation has a curious habit of exposing the weaknesses of certainty.
Every generation of economists eventually encounters a moment when the neat formulas begin to wobble. The numbers refuse to behave. The models require adjustment. The economy, inconveniently, continues to act like a living system rather than a machine following instructions.
The inflation of the 1970s was one of those moments.
It remains one of the most important economic lessons of the modern era because it challenged assumptions about how inflation begins, how it spreads, and why it persists.
The oil shocks of the 1970s were undeniably significant. Oil is not merely another commodity traded on a screen. It is the bloodstream of an industrial economy. It moves the trucks, powers the factories, supports agriculture, and connects the global marketplace.
When energy prices rise sharply, the impact spreads everywhere.
But a deeper question remains, one that sits at the heart of the inflation debate:
If oil prices caused the inflation of the 1970s, why did inflation continue for years after the initial shock? What mechanism transformed a rise in energy costs into a prolonged loss of purchasing power?That question separates a price shock from sustained inflation.
more
https://www.americanthinker.com/articles/2026/08/inflation-oil-money-and-the-missing-piece-of-the-puzzle/
