Two scenarios dominate many discussions about the economy’s status. One suggests that the avalanche of capital flowing into the economy will produce inflation, forcing the Fed to raise interest rates and trigger an economic slowdown. The other scenario says that technological innovation will continue to feed disinflationary forces to such an extent that the economy will not need intervention and will continue to grow steadily. While some part of each might sound right, a more nuanced perspective is required. An overall assessment of inflation needs to consider the economic process that started with the pandemic and that changed as the pandemic began to wane: a negative Demand Shock hit the economy and resulted in a rapid shutdown of institutions and the laying off of millions of workers, and more recently, a positive Demand Shock has hit, as consumers feel good enough about conditional risks that they are starting to spend, and spend heavily. Businesses and industries, which shut down in a hurry, require more time to reopen their capabilities. Thus, short supply and long demand have pushed salaries and wages up. But even that perspective needs refining, as the causes behind most price and wage increases come from a range of contributing factors, making each case sui generis. This rough period of transition and its two scenarios will likely roll out into a steady economy…over time.