We Need to Talk About Inflation: 14 Urgent Lessons from the Last 2,000 Years

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Have there been institutional changes suggesting an increased bias in favour of inflation? King argues that central banks’ bias against deflation during the past decade may have created a bias in favour of inflation. Quantitative easing also removed an early indicator of inflation. If PepsiCo faced tough competition, it could never have gotten away with this. But it doesn’t. To the contrary, it appears to have colluded with Coca-Cola – which, oddly, announced price increases at about the same time as PepsiCo, and has increased its profit margins to 28.9%.

Are there signs of monetary excess that indicate heightened inflationary risk? Here, King points to the rate of US monetary expansion during the pandemic.An] excellent and readable new book about the re-emergence of inflation.”—Larry Elliot, The Guardian

King also is clearly correct that both supply‐​side and demand‐​side factors have driven the surge in the price level since 2021. Yet, one downside of his not outlining his own “model” of the economy is the failure to define his own preferred monetary rule and so make ajudgment on what actions central banks should have taken and when. He admits that in periods like what we’ve lived through, “policymakers are not easily able to distinguish inflationary squalls from periods of inflationary persistence.” That is true, but it is difficult to square with his justified criticism of the complacency of the economic establishment in letting the inflation genie out of the bottle of late. And this is what the real income per capita numbers hide: large bouts of inflation create extreme winners and losers in quite undemocratic ways. Asudden bout of inflation obviously makes those on fixed incomes or stable government benefits alot worse off, while those for whom wage increases occur only infrequently see their purchasing power collapse. On the other hand, those who can borrow heavily and invest the funds in physical assets and real estate, or who have alot of pricing power over their labor, can often come out of inflationary periods sitting (relatively) pretty. These effects are often arbitrary and politically explosive. Some interesting conclusions though. In King’s view the argument used by central banks against tightening, that it was all just ‘transitory’, was fuelled by central banks having presided over a low inflation environment for nearly two decades, falling victim of their own anti-inflation propaganda. As a result, serious mistakes were made when circumstances suddenly changed. We saw the impact of the supply and demand imbalances when Covid restrictions ended and then the extra pressures on energy and food prices with the war in Ukraine. But in King’s view the reappearance of inflation in the last couple of years was not just “a series of unfortunate events” but should have been seen by central banks and acted upon more swiftly. But now people the world over are confronting a poisonous new economic reality and, with it, the prospect of vast and increasing wealth inequality. How have we arrived in this situation? And what, if anything, can we do about it? Celebrated economist Stephen D. King-one of the few to warn ahead of time about the latest inflationary upheaval-identifies key lessons from the history of inflation that policy makers chose not to heed.The longer this volatility continues, the more we look to mitigate – with our commercial broadcast partners but also by testing access to audiences elsewhere. Clients that are econometrically modelled to a required level of TVRs have never been so willing to try something different. Building on the history of inflation and its relationship with money, the author looks at the temptation of printing money, how inflation has undemocratic effects and why it is so difficult to reduce. In April, Procter & Gamble announced it would start charging more for consumer staples ranging from diapers to toilet paper, citing “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods”.

it makes economic planning incredibly difficult, causing people to invest time in thinking about inflation to the detriment of more productive activities, How might monetary policymakers better assess whether inflationary pressures are likely to be more persistent in the future? King posits four “tests” that they should consider. If the answers to the questions are “yes,” then our monetary overlords should be alive to the threat of ongoing elevated inflation. The implicit critique is that, by failing to consider these questions this time, central bankers were asleep at the wheel, allowing aggregate demand to outstrip supply. If you're working with an agency that's 100% centred in the capital, you can access some amazing talent but will they be best placed to help you manage those input costs? At iProspect, we enter 2022 with 18% of our staff in London, connecting a brilliant team in the capital with brilliant teams throughout the UK and beyond. A book cannot do everything, though, and this one was written as the inflationary picture was continually evolving. Overall, it is the best book on the market for using this moment to deliver lessons in history and advice to policymakers. It somehow remains both broad and deep, explaining the perils of ever thinking that inflation is whipped right through to analyzing what went wrong with former UK prime minister Liz Truss’s infamous mini‐​budget. Since the 1980s, when the US government all but abandoned antitrust enforcement, two-thirds of all American industries have become more concentrated.Boeing and McDonnell Douglas have merged, leaving the US with just one large producer of civilian aircraft: Boeing. it makes economic planning incredibly difficult, causing people to invest time in thinking about inflation to the detriment of more productive activities (Germany: buying two beers at the same time; Turkey: hoarding washing machines), A FINANCIAL TIMES "BOOK TO READ IN 2023" "Everything you wanted to know about inflation but were afraid to ask."-Mervyn King "King's lessons command our attention."-Lawrence H. It could raise prices and rake in more money because P&G faces almost no competition. The lion’s share of the market for diapers, to take one example, is controlled by just two companies – P&G and Kimberly-Clark – which roughly coordinate their prices and production. It was hardly a coincidence that Kimberly-Clark announced price increases similar to P&Gs at the same time P&G announced its own price increases. King concluded by looking to the future. He saw two major risks - that central banks may only be able to achieve their inflation targets with a lot more heavy lifting from monetary policy (thereby risking a hard landing), or that they are so fearful of the ramifications of far tighter monetary policy (particularly if fiscal policy has run out of space) that higher inflation ends up being accommodated.