Future Looming with Inflation Apprehension

In a recent article by economist Brigitte Granville, the focus is on the current state of inflation in Japan and Germany, with a nod towards other countries as well. The article does not delve into the global economy or the efforts of central banks, but instead highlights the importance of understanding inflation and its potential impact on the economy.

Despite repeated attempts, Japan has yet to reach its 2% inflation target. The author presents three reasons for this persistent struggle: first, the resurgence of inflation could be facilitated by downplaying its significance; second, dismissing inflation as a "problem of the past" could undermine the efforts of central banks; and third, unusual taxes in certain German cities are causing inflation.

Contrary to what some political leaders might emphasise, the article does not emphasise the threat of debt deflation leading to a depression. Instead, it underscores the importance of understanding the dangers that lie ahead in relation to inflation. Understanding how the Great Inflation from the late 1960s to the early 1980s was tamed offers important lessons for solving deep economic problems.

The economic malaise post-2008 was primarily caused by over-indebtedness, not inflation. Central banks are working to address the most pressing issues of the current time, but the article does not discuss the dangers that lie ahead in relation to inflation.

Interestingly, the high inflation in Germany, which lasted from the late 1960s to the early 1980s, was actually brought under control in the mid-1980s. This serves as a reminder that while different economic problems may exist today, lessons from the Great Inflation can still be applied.

The global economy is currently facing numerous problems, but inflation is not the primary concern. However, understanding the complexities of inflation and its historical context is crucial for addressing deep economic problems and ensuring a stable future for all.