Is today’s inflation due to a supply or demand shock?

It is very important to know what is causing today’s inflation (a positive demand shock or a negative supply shock ? ): If the inflation results from a positive demand shock (some observers attribute it to excessive fiscal deficits in 2020 and 2021 or the strength of the post-COVID economic recovery), then a more restrictive monetary policy to curb demand and combat inflation is warranted; If the inflation results from a negative supply shock (undersupply of labour, commodities, transport, etc.), then a restrictive monetary policy would be completely counterproductive: it would not correct the supply shortfall; it may even exacerbate it by discouraging investment. We do not see any thing to support the positive demand shock theory: The huge fiscal deficits led to forced savings, but these forced savings have not been consumed: fiscal deficits have therefore not fuelled demand; Global GDP is now barely higher than at the end of 2019; that of the OECD is still lower. In contrast, there have been production shortfalls of commodities and semiconductors and a lack of transport capacity due to the shift in demand from services to goods (this is a change in the composition of demand, not excess demand), and the labour supply has fallen in the United States. If a negative supply shock is the right theory, then it would be wrong to respond to the inflation with restrictive monetary policies.