I am always astonished, and sometimes angry, that many people scorn the Milton Friedman (Nobel Prize in Economics, 1976) dictum: "inflation is always and everywhere a monetary issue". Obviously, they are adherents of voodoo Modern Monetary Policy, even if they do not know it as such.
Case in point: I recently got into a heated argument about government COVID handouts regardless of need ($300-400/week to everyone, plus aid to businesses) with a businessman who owns a small chain of retail stores. I explained that the money came from the Fed printing trillions of dollars and, thus, every taxpayer got even deeper into debt. That it was a flood of inflationary money and that it was not a free lunch.
His reaction: it's just "Fed money" of no consequence to inflation, and that the debt could be "just written off by the Fed". When I tried to explain that this debt could not be "just written off" since it was the asset backing the newly printed dollars (the Fed's liabilities), his eyes glazed over. He just could not accept or understand the concept of money/debt creation and dismissed me as alarmist. The discussion was over.
Because I know there are lots of people like him out there, here's the problem:
- The Fed could get all those dollars back by selling the Treasurys it holds to the open market. This would flood the market with bonds causing interest rates to spike, the debt would be unchanged and it would now be held by the private sector. So, it can't be done.
- Or, the Fed could unilaterally forgive the debt and write off the bonds. But then, what would back all those dollars in circulation? How would the Fed's balance sheet be balanced? It wouldn't, meaning the dollars would be, literally, worthless. So, that can't be done either.
Back to Milton Friedman. Natural gas prices are exploding across Europe and Asia, with the US not far behind. The usual suspect being batted about is supply disruptions caused by the pandemic. Really? Hmmmmm... sure, there may be some, but certainly not enough for prices to rise from 20 to 90 euro per MWh -see below. 
Here's what I think Milton Friedman would say:
You (Russia) are the owner of a finite good (natural gas) that you exchange for another good (dollars, euros) whose quantity can be expanded ad infinitum at the push of a button. You always watch carefully what the issuers of those currencies do, because you certainly don't want to be left with a pile of worthless paper and no gas.
Very recently, you observe that the money issuers have thrown all caution to the wind and are printing them with complete abandon. What are you gonna do? Duh! You will limit deliveries of your finite good and let the market sort out the price.
So, yes, of course there are "supply disruptions". But they are neither technical, nor temporary glitches in some Siberian pipeline. The sellers are just closing down the vanes - and can you blame them?
This is most obvious with Russian gas deliveries to Europe because( a) we're dealing with Putin's one man rule and (b) Russia has its own currency but sells gas in euros/dollars.
The US is somewhat different: (a) there are dozens of independent gas producers and pipelines and (b) they get paid in domestically used dollars. Even so, prices are double what they were pre-COVID since energy is a global commodity and quite fungible.
Bottom line: Are price hikes due to the pandemic or because of a flood of money? I vote for the latter.
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