The Specter of Inflation? No, The Reality

Germany’s Der Spiegel has an excellent feature by Ferdinand Dyck, Martin Hesse and Alexander Jung about inflation caused by infusions of cash from central banks. It’s pretty meaty, but I’m not an economist and I enjoyed reading it. The gist: “The truth is that inflation isn’t some specter. It’s already here — still halting, but unmistakable and insidious.”

Two more great bits:

• “It is evident at gas pumps in Germany, where the price of gasoline reached a new record high in September of €1.70 per liter (about $8.35 a gallon). It’s evident in real estate ads, which reveal considerable price increases in major cities like Munich, Hamburg and Berlin. And it’s also reached the precious metal markets, where gold is currently being traded at the record price of $1,775 per ounce.”

• “The US government debt has just exceeded the $16 trillion threshold. Inflation could help reduce this enormous mountain of debt. ‘The alternative is to reform and save — and to accept higher unemployment as a short-term consequence,”’says Bosomworth. ‘But that isn’t as attractive politically.’

• “Instead, the US government is behaving the way governments have always behaved when their debts have gotten out of hand. The history of money is a history of almost constant devaluations.”

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