Inflation is most impacted by two things, supply and demand of products and services and strength of currency. Currencies are all inflating debt at record rates so comparing the dollar to the Euro isn't really a good measure for currency based inflation. It's better when comparing it to commodities or basic staple goods.
Inflation has been running wild because of supply and demand over the past 6 months. It's been a sudden push because both the demand side and supply sides are seeing pressure for different but related issues. The demand side, particularly in tech related (computer chips), travel related industries and construction industries. The construction materials shot up due to a surge in building that happened due to low interest rates as part of the FED dumping money over the market after the covid crash combined with supply shortages since so many companies cut production or weren't running at full capacity during covid. The cpu chips had a huge surge in demand due to people buying devices to work from home, increased demand due to crytpo mining and supply shortages due to factories being shut down from covid. Travel was just a rush of people wanting to get out of their homes all at once after the vaccine hit causing a huge shock in demand. For rental car companies it all really came together. The rental car companies were among the hardest hit from covid. In order to stay in business they had to sell a large percentage of their fleets. They figured once demand came back they would just buy new cars. The car industry can't make cars because of the chip shortages. When you have 200 people looking for 1 rental car, then suddenly the car rental place can ask for $400/day and get it.
The debt ceiling isn't normally a big deal, I think it's been raised 75 or so times, the majority under Republican control. The debt ceiling has to be raised as the economy grows, population increases and spending increases. However, the last two times the Republicans lost power they have weaponized the debt ceiling to intentionally cause harm to the economy for political gain. It's basically a loop hole to object to spending that couldn't be stopped during the legislative process. It can have massive and long lasting impacts including credit defaults and downgrades. It would have been considered treason a few decades ago.
It could go either way. Odds are the next crash will go towards deflation as most do and we will throw even more money at the market to prop it back up. We continue to rinse and repeat until we hit inflation like in the 70's then we better hope we have a leader in office and at the FED that will have the balls to do what is needed (hike rates at the expense of the market) but it is career suicide for a politician (see Jimmy Carter). Most countries hit this point and default as the currency crashes leading to a bunch of really bad things. The third option is stagflation. A country hits this wall of economic gain it simply can not get past. Throwing money on it doesn't help, dropping interest rates don't help and the economy just gets stuck in place where it can not grow while dealing with persistant above average inflation and above average unemployment. It can't hike rates without causing a depression, it can't drop rates because it is already at 0 and unemployment gets stuck at abnormally high levels. This typically happens about the same time as a country has an aging population, population decline and the economy becomes extremely dependant on the governent. This is what happened in both Japan and Europe. At this point you start to see a mass migration of capx moving to other countries or continents. All the signs are pointing this way for the US economy. Ironically, it is likely moving from one crisis to the next that is probably preventing stagflation from setting in.
In the 90's we had this massive economic boom combined with some responsibility of government spending and reasonable tax levels and were able to erase a huge debt in matter of a few years. Our debt levels have gone well past that now, we collect far less tax revenue and have gone so far with spending that we would have to make massive cuts just to get back on track. Since that time we've had the dot com bust, 9/11, the financial crisis, the debt crisis and covid crisis. Technically, we haven't fixed the problems from the financial crisis and that is going to come to a head with debt at all levels.
I think we have been in a period of high inflation that has been masked by technological advances such as energy efficiency, cheap consumer goods, agriculture output gains combined with engineered food (plant and animal), plus the introduction of globally competitive marketplace (internet). Technology is probably going to keep these advances going for a very long time so at least we have that.
Also, it's a whole lot easier to make money in the market over the last decade if you don't know any of this stuff. :hihi: