False. Inflation was mainly caused by the central banks(especially the US FED but also the ECB who followed suit) devalued the currency by over-issuing it during the pandemic, not due to the post pandemic high energy prices which are not that high when you adjust for the crazy Inflation the excessive money printing generated.
In short, they barrowed money in your name with you as a guarantor and now you're paying for it, it's that simple.
The war caused by Russia is just a convenient scapegoat that's easier to sell to the financially illiterate population to deflect the blame. Keep in mind most voters don't understand basic economics and how currency supply affects inflation, but they do understand "Russia dropping bombs = bad".
When 80% of the entire world supply of USD (the world reserve currency that the EU also has to use) was printed during the pandemic, how can anyone say that Russia's war caused the inflation? Do people not know arithmetic anymore?
Money supply increased significantly in 2020 for sure but that's NOT what you're seeing in the M1 graph. M1 was revised to include savings accounts at the same time and this is the major source of the discontinuity:
https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...
M2 captures the pandemic influx better and is significantly less dramatic: https://fred.stlouisfed.org/series/WM2NS
Do you think that since M1 is down 13% since peak we should be seeing deflation right now, or does M1 growth only impact inflation one way?
It would be stupid to discount the effect that artificially limiting energy exports and using it for blackmail before and during the full-blown Russian invasion is naive. IIRC my nat gas prices went up like 10x compared to the previous year.
Utter nonsense, and I say this as nicely as I can.
Check the price of Russian gas before and after the invasion, and the resulting price of electricity: https://ec.europa.eu/eurostat/statistics-explained/index.php...
Combine with the fact that Russia and Ukraine are some of the biggest exporters of many critical raw materials, like importantly, foodstuffs (wheat, sunflower oil, etc), and steel, aluminium, oil, gas. Hell, there was a crisis in availability of mustard and snails in France due to the invasion of Ukraine (and on the mustard, a series of bad harvests in Canada which further complicated things).
We can even clearly see it in the inflation charts, first there was growth in energy inflation towards the end of 2021 (as things were ramping back up from Covid), then a big spike in 2022 due to Russia's invasion, and then over 2022-2023, related spike in other sectors: https://ec.europa.eu/eurostat/statistics-explained/index.php...
To pretend none of this had no impact whatsoever is wilful ignorance.
Bruh, 80% of all USD in existence was issued during the pandemic alone. How the hell can you tell me with a straight face that that didn't cause the inflation? I feel like I'm taking crazy pills.
Read the notes in the link you posted. I don’t think it says what you think it says.
In May 2020, the definition of M1 (monetary supply in “cash”) was changed to include savings deposits. They changed this not due to some conspiracy, but because savings accounts were deregulated to remove withdrawal limits, effectively rendering them cash-equivalent, and thus necessary to include in M1 metrics.
I.e. the 80% spike has nothing to do with money being printed.
The relationship between the money supply and inflation is mostly one of perception causing action, not some kind of primal law of economics. Debt and interest rates, trade friction and availability of goods, and availability of energy and labor are all more closely related to inflation rates, especially for monetarily sovereign currencies.
Bad faith argument again, or at least terrible tunnel vision.
So what? In the EU a lot of that money went into the Recovery fund, which released the funds in multiple steps (only the first one was in 2021), and a lot of it is still remaining in the fund.
How do you explain the massive inflation in the EU then?
And are you seriously that centred on "money printing" that you cannot imagine gas and oil prices raising multiple times, and the disappearance of multiple critical raw material suppliers, had _no impact whatsoever_?
>Bad faith argument again
Stop saying this whenever somebody disagrees with you. That's not what that term means at all.
I'm not saying this because they're disagreeing with me. Inflation is probably one of the most talked about topics of the past few years, I find it impossible that people haven't heard about the multi-layered complexity of it, and thus anyone blaming it purely on "money printing" has to be acting in bad faith.
It's not really complex, GP is correct.
High energy prices cause high transportation and manufacturing costs which causes everything else to rise.
But the main cause of inflation is printing of money, especially when you introduce such a large amount in such a short time.
People used to know that, they either pretend it's not true now or they're ignorant.
And yes the "bad faith" parrot line is really annoying and doesn't contribute to the conversation. It's what people say when they don't have a rebuttal.
> It's what people say when they don't have a rebuttal
Only I have a rebuttal, and came with receipts from Eurostat. So what exactly are you trying to argue?
> But the main cause of inflation is printing of money, especially when you introduce such a large amount in such a short time.
The original premise (which is still in bad faith, however much you dislike that part) was that money printing was the main cause. And this is fundamentally and provably wrong (check my comment upthread, Eurostat inflation per sector with the timeline). Inflation was kickstarted by energy inflation which coincides with the Russian invasion.
Did money printing contribute? Of course. Did Russia's invasion of Ukraine and all the issues it brought in energy prices and food prices? Of course. Did the Houthis contribute with their attacks disturbing supply chains? Probably. Did Covid contribute with all the supply chain issues it caused? Of course.
Trying to pin it solely or mostly on one single reason, especially when it is a global phenomenon that many countries suffered from regardless of their exact specifics (e.g. Sweden's monetary policy was not the same as the EUs nor Canada's, yet they all suffered from serious inflation) is arguing in bad faith. It's so trivially provably wrong, it's not even funny entertaining people who are wrong.
This is due to people being taught that inflation is about the money supply as a matter of faith in (US at least) grade schools and colleges. It's rare for other causes to discussed or for the quantity-of-money argument to be questioned.
While I would also lean towards blaming the US Fed, how can you be so confident in precisely what caused inflation?
One of my big issues with economics as a "science" is that they try to boil down massively complex systems into a handful of numbers. When it comes to global economics and geopolitics the system is even more complex. How would we ever be able to say any particular time of inflation was causes by exclusively, or primarily, any one factor?
At best looking at historic data and seeing graphs that move together show correlation, they will never show causation.
The European Central Bank said it’s due to energy.
The people who caused the problem say they weren't responsible for the problem.
Do you see the issue here?
That goes both directions, though. Central banks are prone to understating their responsibility for bad things; the gold bugs and crypto hodl folks are prone to overstating it.
The answer likely lies somewhere in the middle. The US's relatively soft landing post-pandemic seems to demonstrate some use of monetary policy in this fashion works.
Of course they'd say that. Did you expect them to just say "yeah, we fucked you over by devaluing the currency causing your wages to be worthless"?. Don't be naive please and look into how much currency was issued during the pandemic and see for yourself.
