Money, as most people understand it, is the bits of metal and paper issued by the country where you live. For Europeans, it is the colorful stuff issued by the European Union, rather than your home government. Even so, no one thinks much about money beyond what it can do for you. It is the cool stuff you can buy, how much you earn, and how much you have to spend for the things you need to live.
The West is suffering from inflation at the moment, so people are noticing that their money buys less than it did in the recent past. In most Western countries, fuel prices are 50 percent higher than a year ago. Food prices have doubled for some items, and the price hikes have only just started to bite. Britain is warning that they are facing the biggest drop in the standard of living ever recorded.
It has been over forty years since the West has seen this sort of inflation. That assumes the official numbers are accurate, which is unlikely. In the United States, official inflation is 7 percent, but that is using the new math. If we were using the same math we did in the 1970s, then the real number would be close to double. That is on top of the shrinking-container phenomenon called shrinkflation. Not only are prices going up, but the containers are getting smaller.
Experts are torn on how to blame this on someone other than the people who are responsible for it. Some say it is due to the supply chain disruptions caused by the Covid lockdowns. Of course, no one asks why the people who imposed the shutdowns did not think of this at the time. Others blame the price hikes on the sudden expansion of demand after the Covid panic subsided. Some, of course, blame Russia.
The main reason is that the Federal Reserve and the European Central Bank created trillions of dollars and euros out of thin air during the Covid panic. Throwing everyone out of work would result in food riots, so they showered the public with free money as a form of riot insurance. The trouble is the money did not magically go away, so we have the classic problem of too much money chasing too few goods….