In 2021, inflation returned. After a year-long debate, nobody can any longer deny this. Next year, we will discover whether it’s here to stay and how much bitter economic medicine will be required to quell it.
On this vital issue, opinion is as divided as ever. Optimists still maintain that even if inflation has turned out to be more than a transitory blip, it will soon die down. Whether they’re right depends on the outcome of some of capitalism’s most profound conflicts.
A number of factors will indeed combine to push downwards on inflation next year. Used-car prices doubled and gasoline prices rose by 50% last year. That’s not going to happen again. Bottlenecks in global trade have already begun to loosen up a little. And there is ample room for central banks to tighten monetary policy; so far, there has been no attempt to reduce demand by raising the price of money or cutting back on its supply.