Latest bold rate hike by Fed will test grip of inflation on US

"Since the onset of the pandemic, lawmakers have spent about $6 trillion on various income-support programs for households and businesses," wrote Donald Luskin, chief investment officer of TrendMacro, in a piece in The Wall Street Journal. "That all dropped straight into the bank accounts that are part of M2, which also grew about $6 trillion over precisely the same period." 2 is cash in circulation along with liquid bank and money-market fund balances.

Luskin quoted famed economist Milton Friedman who said that "inflation is always and everywhere a monetary phenomenon". Growth in M2 peaked at an astronomical 27 percent in February 2021, but has been falling since, Luskin said.