Philip Cross: The Government Is Driving Inflation

Inflation is proving to be more than transitory, reaching an 18-year high of 4.7 per cent last month. Government-created distortions of personal incomes, savings and labour market choices are helping fuel it. These distortions also make inflation harder to forecast, although economists have long struggled to develop a viable theory that forecasts inflation. As a result, many central banks have been slow to react to the price rises. At a fundamental level, inflation reflects our collective inability to agree on how to pay for the massive debts incurred during the pandemic. Read More