There are various economic theories and assumptions about the extent to which pouring liquidity into the economy creates inflation. Over the last ten years, the close correlation between the two has diverged.
For many people Christmas was chaotic as the Omicron variant ripped up plans for parties and Christmas family get-togethers, which in the UK was followed by the implementation of Plan B, i.e., a mild increase in restrictions much to the disappointment of health service and academic forecasters.
2021 started with chaos caused by the arrival of Covid 19 and the shutting down of large chunks of the world’s economy. It was quite understandable that governments reacted with shutdowns in the face of a pandemic, the scale of which had never been experienced in our lifetime.
It is good news all round, but it is buried in a smokescreen of political confusion. The bad news is the hangover from the economic disruption still being caused by Covid.
Hardly a black swan event, HGV driver shortages were causing problems even before Brexit and the subsequent restrictions on Europeans working in the UK. Wages in the industry had been drifting downward for some time, which has contributed to the disparity between lower and higher wage rates in the economy.
There have been dramatic happenings since July. The US and Europe have further distanced themselves from China and the ASEAN political stage. The US’s abrupt withdrawal from Afghanistan is really quite extraordinary, but not entirely exceptional.