Who knew?

Print £440B of new money and you get, subsequently, inflation.

And yet we're all supposed to act like we're surprised. "Wow! Where did that come from?"

Exactly a year ago I compared inflation to Voldemort - the evil that dare not be spoken about. Something that had been vanquished back when Reagan and Thatcher were in office and we were all into Adam and the Ants and driving Mini Metros.

But with current inflation rates of 7% in the UK and 8.5% in the US, here we are again. Again. Learning economic truths anew. One almost wants to get Biblical on the ass of those in power who wilfully, stupidly, created this mess. The standards of public life - I’m afraid have declined. Or perhaps they were never that high. But this goof seems akin to a blindfolded man throwing darts at a dartboard framed by balloons and getting shocked by the the resulting bangs.

"Inflation is cause by prior expansion of the money supply." This dictum was drummed into us during mid 80's economics classes.

What about another old favourite from the dusty book of forgotten economic laws? "Inflation is caused by too much money chasing too few goods."

(There is another contributory cast of characters in this 70's revival; the knock-on effects of hysterical Government COVID measures which shut the economy down for nearly two years, the concomitant increase in the prices of commodities, oil price rises (COP26 & ESG), sanctions against Russia and the disruption in the world economy caused by the war with Ukraine. These latter two however just exacerbated an existing trend. Any politician who tells you otherwise is lying.)

"Why did no one see this coming?" the Queen famously asked professors at the London School of Economics in 2008 after the credit crunch - so obvious retrospectively - was completely missed by the world's financial authorities. Perverse incentive structures, complicated instruments and misdirected regulations would be the answer. And venality.

This time though, what were they thinking - printing money and then being surprised when this debasement did its destructive thing on the currency?

Inflation is a tax we all pay as I have pointed out previously. Currently this tax is - officially - 7% in the UK. Real rates of inflation - ie, what you and me actually pay, run to double digits. This is before - of course - any tax hikes our governing classes are belated throwing at their whipped populations. The answer to the errors of too much government is never, ‘more government’.

So, to return to the Queen's question, why did no one see this inflation coming? Some did (me! me!) but the dominant riff from central bankers, until recently, is that the return to inflation was transitory. How’s that working out for ya? That rhetorical construction seems wilfully, and conveniently, blind. My contempt for those in power grows.

Printing money is a very dry subject made all the more so by its modern nomenclature - Quantitative Easing. The sums involved are too high for most of us to imagine. The monetary authorities all have impressive credentials behind their names, and occupy the high places of financial respectability. If they say that Quantitive Easing is really okay, and we’re not going to get screwed, who are we - the poor population - to disagree?

Inflation and cost of living are becoming the next grand conversation and perhaps already are - if we can absorb more than one meta-narrative at a time. There’s a cynical edge to the media I realise more and more as I get older. The MSM push one meta narrative at a time and everything is seen through this distorted - and temporary - lens. Brexit. Trump. Covid. Ukraine. Everything is about this one issue. Until it’s not. Meanwhile, central banks roll the printing presses and none of us wonder how the hell anything is paid for.

Interests rates must rise to curb inflation. Similarly treasury bond yields must, and are, rising. The alternative - more QE - beyond the craziness of the ECB - must surely out of the question this time. Even in the thickest skulls. You can't fight a fire by dousing it with £1.62 a litre petrol. Weimar Germany, 70’s Britain or Mugabe’s Zimbabwe are not to be aspirational models of good stewardship.

And if someone - whether politician or central banker - suggests in the future that printing money is a good thing we'll know, perhaps - and again - that inflating a currency is a quick fix that carries long term, and destructive, consequences.

Won't we?

However, the cycle time it takes to forget stupidity in our society is diminishing. So, at the present rate of forgetfulness, I’d give it five years before some highly remunerated moron will suggest, pompously - like they know what they’re saying - that increasing liquidity in the economy by QE to stimulate investment is the way to go.

And they’ll be wrong but we’ll do it anyway.