Monetary Policy

Rising inflation is the result of ill-considered monetary policy

Christopher Snowdon writes for City AM

Christopher Snowdon, IEA Head of Lifestyle Economics, has written a piece for City AM detailing his thoughts on the causes of the high levels of inflation currently being seen in the UK and US.

“There are several reasons why inflation has raised its ugly head again. Demand for gas and oil has outstripped supply. The cost of shipping rose fourfold during the pandemic, from less than $2,000 per container to $10,000. Covid-19 restrictions limited production and created scarcity.”

“Printing money does not inevitably cause inflation, and in the digital age most of the money is not literally printed. But when vast sums of money are created out of thin air, inflation can be expected. This is especially true when the supply of goods and services has been constricted. It is a classic case of too much money chasing too few goods.”

Read the full article here.