Causes of inflation

Milton Friedman – the real cause of inflation

[ 25/April/23 ]

Some truth in what he says, but that truth is predicated on a number of factors, one being that there is some real relationship between the amount of money present and the amount of goods and services present. A reduction in the availability of goods and services, while holding money constant (or increasing) – also leads to inflation.

The real quantity of fossil fuels available (planet wide) is decreasing, that is hugely inflationary at multiple levels.

We are in a very complex situation, and any attempt to over simplify will necessarily end badly for all concerned.

I do believe it is solvable, but not by any appeal to over simplistic explanations (at any level). It is extremely complex across many dimensions. We need all the creativity we can muster, and that needs to be matched with levels of responsibility not often seen to date. Central control is not a viable solution, but nor is going backwards to things from the past. We are in many entirely novel strategic contexts with many sets of threats without precedent in the written record, and we need to understand the deep lessons from the evolution of complexity (encoded in both biology and culture), most importantly that all new levels of complexity demand new levels of cooperation to survive long term.

Individual freedom is both necessary and desirable, and it is only survivable if coupled with the highest levels of cooperation and responsibility and respect for diversity.

Milton over simplifies. That has a lot of appeal, for a host of evolutionary reasons, but it is not survivable long term.