We Need to Talk About Inflation: 14 Urgent Lessons from the Last 2,000 Years

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Institutional reforms in a world of deflationary risk can lead to an inadvertent bias in favour of inflation Stephen Kind suggests four tests to determine whether inflation is persistent (these are, arguably, retrofitted): How will the consumer react as the cost of living ratchets up? Right now, we don't know. It's been a very long time since there has been a comparable situation. We need our collective ears to the ground on this matter more than any other. But they’re raising prices even as they rake in record profits. How can this be? They have so much market power they can raise prices with impunity.

That is your right. But you'd be advised to read this book first."-Stephanie Flanders From investors and monetary authorities to governments and policy makers, almost everyone had assumed inflation was dead and buried. Deep down, most economists know (or think they know) what is needed to cure inflation: an independent central bank, tightened monetary policy, and fiscal prudence to mitigate the incentive for inflation becoming too high. Yet today we can see that ridding the economy of elevated inflation is easier said than done. For cost savings, you can change your plan at any time online in the “Settings & Account” section. If you’d like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial. Most of those who have to deal with inflation are too young to remember when it was last a serious issue. This book teaches them what they need to know. King’s lessons command our attention.”—Lawrence H. Summers, former US Treasury Secretary

14 Urgent Lessons from the Last 2,000 Years

Impulse for bad policies / People will not put up with these disruptions for long before they demand that politicians act. Unfortunately, that can lead to bad policies, such as bailing out some people (a palliative that doesn’t solve the underlying inflation problem) or price controls (which create shortages and all sorts of other inefficiencies). King exhaustively and patiently takes on the case for price and wage controls, expertly using the historical evidence to rubbish their prospect of solving inflation. From investors and monetary authorities to governments and policy makers, almost everyone had assumed inflation was dead and buried. But now people the world over are confronting a poisonous new economic reality and, with it, the prospect of vast and increasing wealth inequality.

But none of this responds to the deeper structural issue – of which price inflation is a symptom: the increasing consolidation of the economy in a relative handful of big corporations with enough power to raise prices and increase profits. it leads to extreme redistributions of wealth that are rightly perceived as arbitrary and unfair, and The government green-lighted Wall Street’s consolidation into five giant banks, of which JP Morgan is the largest. The longer this volatility continues, the more we look to mitigate – with our commercial broadcast partners but also by testing access to audiences elsewhere. Clients that are econometrically modelled to a required level of TVRs have never been so willing to try something different. Are there signs of monetary excess that indicate heightened inflationary risk? Here, King points to the rate of US monetary expansion during the pandemic.Policymakers are not easily able to distinguish inflationary squalls from periods of inflationary persistence In this I always look with admiration at Procter & Gamble. For a decade or more, it has looked unfavourably at any commercial proposal that doesn't embrace nearshore and offshore centres of excellence. It's a standard requirement for a global business that reaps the benefits of connecting great teams no matter where they are based. it makes economic planning incredibly difficult, causing people to invest time in thinking about inflation to the detriment of more productive activities (Germany: buying two beers at the same time; Turkey: hoarding washing machines),

Third, are inflationary risks trivialised or excused? It took 2.5 years for the annual rate of UK inflation to rise from 0.3 per cent to 10 per cent: yet, throughout that period, the Bank of England persistently forecast that inflation would return to the 2 per cent target within two years. You may also opt to downgrade to Standard Digital, a robust journalistic offering that fulfils many user’s needs. Compare Standard and Premium Digital here. A ‘rules-based’ policy framework is important: the public need to know how policymakers are likely to respond We all know what happened next. Central bankers were wedded to aworld that no longer existed. They thought the 2021 inflationary pressure was “transitory” and would soon peter out. It did not and, in fact, still looks stubborn across many countries in early 2023, despite the monetary tightening that has occurred so far.Why is inflation such a bad thing? Many people conflate inflation with the cost of living and are hostile to it because of the effect a rising price level. Germany famously suffered a terrible hyperinflation in 1922–1923, with a monthly inflation rate of 322 percent. Yet, remarkably, German real incomes per capita fell only 7.8 percent between 1918 and 1923, considerably less of a decline than seen in the United Kingdom over the same period. In other words, even though prices were shooting up, so were nominal incomes—at least across the economy in aggregate. The major costs of large bouts of inflation are not that they make us worse off, though for many people they undoubtedly do. No, the three biggest costs of high inflation are: If PepsiCo faced tough competition, it could never have gotten away with this. But it doesn’t. To the contrary, it appears to have colluded with Coca-Cola – which, oddly, announced price increases at about the same time as PepsiCo, and has increased its profit margins to 28.9%.

But there’s a deeper structural reason for inflation, one that appears to be growing worse: the economic concentration of the American economy in the hands of a relative few corporate giants with the power to raise prices. Some interesting conclusions though. In King’s view the argument used by central banks against tightening, that it was all just ‘transitory’, was fuelled by central banks having presided over a low inflation environment for nearly two decades, falling victim of their own anti-inflation propaganda. As a result, serious mistakes were made when circumstances suddenly changed. We saw the impact of the supply and demand imbalances when Covid restrictions ended and then the extra pressures on energy and food prices with the war in Ukraine. But in King’s view the reappearance of inflation in the last couple of years was not just “a series of unfortunate events” but should have been seen by central banks and acted upon more swiftly. As with all the best economists, King’s views are grounded in an understanding of our historical experience.”—Roger Bootle, Daily TelegraphHistorically informed and lucid.”—Martin Wolf, Financial Times, “Best Summer Books of 2023: Economics” Why not? Industry experts say oil and gas companies saw bigger money in letting prices run higher before producing more supply. They can get away with this because big oil and gas producers don’t operate in a competitive market. They can manipulate supply by coordinating among themselves. Since the 1980s, two-thirds of all American industries have become more concentrated A FINANCIAL TIMES "BOOK TO READ IN 2023" "Everything you wanted to know about inflation but were afraid to ask."-Mervyn King "King's lessons command our attention."-Lawrence H.