One graph shows why US inflation has monetary nature and why will end in catastrophic deflation

The discussion on the reasons behind and responsibilities for the price inflation in the USA can be illustrated in one graph in Figure 1 - the ratio of personal income and GDP as measured by the Bureau of Economic Analysis. The COVID-driven extra money supply or so-called "helicopter money" (Bernanke loved this idea) was not connected to any economic activity. The ratio in Figure 1 below demonstrates that the share of PI was 105% in 2020Q2 with a long-term average of 85%.  This is 20% of GDP which were not a usual component of the Gross Domestic Product, i.e. 20% of helicopter money/ One can call this money a direct dollar devaluation. The price reaction is clear - the whole set of goods and services just jumped to the new price of the dollar to equalize supply and the new demand. 

In 2022Q1, one can see that the PI/GDP ratio is back to the long-term trend and no helicopter money is left in the economy, but the prices now include the helicopter money at the new PI level of around 100% of the GDP. There is a time delay of approximately 1.5 years between money injection into the economy and price increase. In Figure 2, the PI/GDP ratio is synchronized with the CPI inflation rate scaled to the PI/GDP level in order to stress the coherent evolution. Inflation represents the integral change in helicopter money. In the second half of 2021 and in 2022, we observe an abrupt decrease in the money supply  (such an artificial surge in money supply has never been observed in the past in the USA) will induce an abrupt price fall in the near future - deflation. A new portion of helicopter money is the remedy to avoid deflation now. But the deflationary potential is increasing proportionally. 

Figure 1. PI?GDP ratio since 2000

Figure 2. The current CPI (blue dots) delays by approximately 1.5 years behind the money injection. The shifted CPI (red dots) is synchronized with the money injection as expressed by the PI.  In the near future (likely in 2022Q4 or 2023Q1), the CPI will fall below the zero line.