As inflation rises, the monetarist dog is having its day

Financial Times/Martin Wolf/2-22-2022

“In sum, the inflationary genie is out of the bottle, especially in the US. The danger is that this ignites a spiral, in which inflation expectations shift upwards, causing a flight from money and so further destabilising expectations.”

USAGOLD note: An unexpected turn toward the monetarist view of things from Martin Wolf, chief economics commentator at the Financial Times. He warns that just as the 2008 crisis showed that banking matters, so the current crisis shows that money matters. Central banks, he says, should not dispense with “valuable information just because they do not like what it shows.” The problem with the warnings, though, is that, as he points out in the quote above: The inflation genie is already out of the bottle, and, we will add, it will be difficult to put it back in.