Some economists believe that government-imposed pandemic lockdowns and clean energy policies have both limited production and, as a result, exacerbated price hikes in advanced economies.
Daniel Lacalle, chief economist and head of investments at Tressis GestiÃ³n, shared an article about central banks wanting the world to believe the current spike in inflation is temporary or due to shortages. However, economists believe that it is mainly due to the surge in demand which is fueled by excessive growth incentives and the money creation unleashed during the Covid-19 pandemic.
Massive government support and central bank monetization have helped prop up economies during the recurring lockdowns imposed during the pandemic. Despite job losses and market income, the wealth of U.S. households has increased by $ 32 trillion since the start of the Covid-19 health crisis, fueling consumer spending and aggregate demand. Along with an increase in the broad money supply, inflation is actually driven by too much money rather than too little goods.
According to forecasts by the Organization for Economic Co-operation and Development (OECD), world economic output is expected to grow by 5.7% in 2021 after falling to 3.4% in 2020. As a result, advanced and emerging economies are expected to grow. recover production lost during the Covid-19 crisis.
Moreover, inflation accelerated as output recovered in the United States and the European Union (EU), indicating that inflation is not the result of a shortage of goods but an increase in the money supply during the pandemic.
“Shortages” do not cause inflation. Money creation is https://t.co/XlLQjkm5KV
– Daniel Lacalle (@dlacalle_IA) October 7, 2021
Charles Kenny, senior researcher and director of technology and development at the Center for Global Development, tweeted about the warning from famous shortbread maker Walker about labor shortages caused by Covid and Brexit to cost him sales as he aims to recover from his toughest year. Managing Director Jim Walker said the Moray company is currently looking for 200 additional workers to meet growing demand during one of its busiest seasons.
Walker’s warning came amid the growing impact of the Covid-19 crisis, U.S. import tariffs and Brexit, indicating that the company’s profits had halved and sales had fallen of $ 22 million in 2020.
The pandemic and Brexit have severely affected the availability of workers in Moray, one of Scotland’s 32 local government council regions. Walker’s is one of the region’s largest employers with a workforce of 1,400. The company closed its factories for three weeks at the start of the pandemic in March 2020, but kept its employees on full pay.
World-renowned shortbread maker Walker’s has warned that labor shortages caused by Brexit and Covid will cost it sales as it tries to bounce back from its “hardest year in living memory. “https://t.co/pS13Dbhgle
– Charles Kenny (@charlesjkenny) October 7, 2021
Stephen Gordon, professor of economics at Laval University, Quebec, Canada, shared an article on Ottawa as part of discussions to extend pandemic aid beyond October 23, 2021 for some emergency wage and rental subsidies. Gordon tweeted that the Canada Emergency Wage Subsidy (SSUC) was to support employees during the height of the Covid-19 pandemic, but 18 months later, business and union leaders are pushing for a wide extension of expiring programs which should go directly to people who lost their jobs during the pandemic.
Dan Kelly, president of the Canadian Federation of Independent Business, said the grants are based on lost revenue suffered by businesses, but the maximum amount has been increased from 75% of eligible expenses to 20%. He stressed that the maximum should return to 75%, and that all companies impacted by Covid should be entitled to these subsidies.
Direct payments to individuals and businesses made up the majority of federal emergency spending during the Covid-19 crisis, resulting in an estimated federal deficit of $ 354.2 billion in 2020 and a forecast deficit of 154.7 billion dollars in 2021.
The SSUC was intended to maintain the working relationship during the height of the pandemic. 18 months later – the business community is pushing to be subsidized up to 75% of its payroll. And all this in the midst of a so-called “labor shortage” .https: //t.co/6CWnqcvddr
– Fabian Lange (@fabolange) October 7, 2021