Inflation is a quiet killer to living standards. It creates confusion, too. US wages are up 23% in the past six years, but unchanged after adjusting for inflation and down sharply after taxes. Global policy responded aggressively to the rise in inflation to bring real incomes back to their natural, upward trajectory. Wall Street believes it – inflation expectations are pinned close to 2% next year and beyond. Main Street doesn’t – consumers are miserable about prospects. The transition to low inflation is just too slow. The wisdom of the crowd shows subtle doubts, too. Last year, if we got the re-rating of the Fed terminal rate right, everything else followed. This year, there’s nuance. Fed terminal rates have leapt to new highs, but digital asset markets, inflation commodities, and emerging markets are all standing on much higher ground having barely retraced. Old habits die hardest. Clues will arrive in micro data, and traditional markets can provide guidance for digital ones. Producing things like gold and copper capture all sorts of costs – labor, energy, transportation, and maintenance capital spending. The all-in cost of production for gold rose to a record last year and increased more than 20% for copper in the face of weaker output prices. That sets expectations for future production. Miners need a much larger future profit margin to invest in new capacity, especially with ESG uncertainty. It is precisely the pattern of conservative discipline emerging with bitcoin miners. And that’s the vicious cycle of scarcity. Scarcity creates more inflation. And inflation creates more scarcity.