I don't think we are remotely ready for what is about to hit us, writes Dan Hannan.
The only meaningful way to measure wealth is to look at the ratio of time worked to goods or services purchased. How many minutes did you need to put in to afford, say, a haircut, a cup of coffee, an hour of artificial light, or a journey to the nearest city? By that measure, human beings have been getting steadily richer for several hundred years. But there are occasional downswings, and this one looks especially nasty.
Then came the pandemic and the lockdowns. Countries around the world responded by paying people to stay home and magicked up even more money to cover the cost. A sharp increase in the money supply combined with an equally sharp fall in the production of real-world goods and services can only mean inflation. Almost all of us will find that we must work longer hours or that we can afford fewer things — or both.
I am perhaps unusual in that my inflationary memories are not of Jimmy Carter’s America, or even of Edward Heath’s Britain, but of Alan Garcia's Peru. During my 1970s childhood, the Peruvian sol was a solid enough currency. Old people still called 10 sol notes “libras,” a folk memory of the years before 1930 when the currency was pegged to sterling at the rate of 10 soles to 1 pound. Then the debt crisis took hold, and the printing machines began to hum.
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