A decent piece on macroeconomics in The Guardian.

The surge in oil prices is a supply side shock, yes, of course it will lead to inflation, but the point is to have that one single burst of inflation rather than embedding it in the decisions people make going on years into the future.

You might not be surprised to find that it was not written by The G\’s economics editor.

4 thoughts on “How Odd”

  1. It’s not true that we have to accept a cut in our standard of living, however. If it’s true that half of government spending is wasted, as I think you hae argued, then we simply need to reduce that portion by 5% and then no-one will be worse off?

    Tim adds: Quite possibly true but I’m afraid this summer lurgy isn’t allowing such complex thoughts today.

  2. How does a rise in the price of anything (whether oil, labor, or pencils) cause inflation.
    A rise in price of something generally causes a decline in the portion of individual budgets formerly going to other things. Only an increase in the quantity of money (beyond the increase in the quantity of things vendible) can possibly account for a rise in the general level of prices.

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