The Problem with “Greedflation”

Chart 1: from a paper by George McCandless and Warren Weber in their paper “Some Monetary Facts.” It plots the average inflation rate and the average rate of money growth in 110 countries over a 30-year period. Such graphs are common in intermediate macroeconomic textbooks (such as Robert Barro’s Macroeconomics). This certainly seems like evidence in support of the idea that more dollars in circulation means higher dollar prices.

"The argument I was addressing in this post was this notion of so-called “greedflation”, or the belief that rising inflation is caused by higher mark-ups by firms.... [instead of] more dollars in circulation lead[ing] to higher dollar prices ...
    "This [notion] is an attempt by people to treat every bout of inflation like isolated cases that require the fresh eyes of a new detective. And yet, greedflation has no explanation for the evidence put forth above. Perhaps they could dismiss the first chart as a spurious correlation or reverse causation. However, the same cannot be said of the second. Are we supposed to believe that there was a sudden outbreak of greed that corresponded almost perfectly to the collapse of the Bretton Woods system? Have firm markups vastly exploded in our era relative to other eras?
    "Even ignoring those questions, the greedflation advocates could argue that I am correct in general, but not in this single instance. However, even this claim is dubious. As I showed in a previous post, even if the only data one had was data on inflation and the growth rate of the money supply at the end of 2020, it was perfectly predictable that we would observe persistently high inflation over the next 2 years. Once again, the simple story that I am telling here is able to predict out-of-sample.
    "In his famous study of religion, René Girard lamented that 'a panic-stricken refusal to glance, even furtively, in the only direction where meaning could still be found dominates our intellectual life.' One can’t help but see a similar refusal in recent discussions of inflation."

~ Josh Hendrickson, from his post 'Greedflation: Let's Try This Again' [emphasis mine]

Chart 2: "If the story that I told is correct, then one should expect that dollar prices were relatively stable under a commodity standard. Following the collapse of the Bretton Woods system, there is no constraint on the supply of dollars since dollars are no longer redeemable for any commodity and the dollar is no longer defined as a particular quantity of some commodity. Above is a graph of US consumer prices (1800-present) using data from the Federal Reserve Bank of Minneapolis.

"Note that the predictions of my simple story are consistent with the graph. Stable prices are evident during the days of commodity money. There is modest inflation during the Bretton Woods era and then consumer prices rise rapidly following the collapse of Bretton Woods. The simple story seems consistent with the data again."