“The hardline monetarists call for sharp rises in interest rates to curb demand while the Keynesians worry about wage-push inflation as rising wages ‘force’ companies to raise prices. But inflation rates did not rise when central banks pumped trillions into the banking system to avoid a meltdown during the global financial crash of 2008-9 or during the COVID pandemic. All that money credit from ‘quantitative easing’ ended up as near-zero cost funding for financial and property speculation. ‘Inflation’ took place in stock and housing markets, not in the shops. What that means is that US Federal Reserve’s ‘pivot’ towards interest rate rises and reverse QE will not control inflation rates.

There is an alternative to monetary or wage restraint, these policy proposals of the mainstream, acting in the interests of bankers and corporations to preserve profitability. It is to boost investment and production through public investment. That would solve the supply shock. But sufficient public investment to do that would require significant control of the major sectors of the economy, particularly energy and agriculture; and coordinated action globally. That is currently a pipedream. Instead, ‘Western’ governments are looking to cut back investment in productive sectors and boost military spending to fight the war against Russia (and China next).”