varoufakis92_ ROBYN BECKAFP via Getty Images_price increases ROBYN BECK/AFP via Getty Images

Inflation as a Political Power Play Gone Wrong

A half-century long strategy, led by corporations, Wall Street, governments, and central banks, is coming undone. As a result, the West’s authorities now face an impossible choice: push conglomerates and states into cascading bankruptcies or allow inflation to go unchecked.

ATHENS – The blame game over surging prices is on. Was it too much central-bank money being pumped out for too long that caused inflation to take off? Was it China, where most physical production had moved before the pandemic locked down the country and disrupted global supply chains? Was it Russia, whose invasion of Ukraine took a large chunk out of the global supply of gas, oil, grains, and fertilizers? Was it some surreptitious shift from pre-pandemic austerity to unrestricted fiscal largesse?

The answer is one that test-takers never encounter: All of the above and none of the above.

Pivotal economic crises frequently evoke multiple explanations that are all correct while missing the point. When Wall Street collapsed in 2008, triggering the global Great Recession, various explanations were offered: regulatory capture by financiers who had replaced industrialists in the capitalist pecking order; a cultural proclivity toward risky finance; failure by politicians and economists to distinguish between a new paradigm and a massive bubble; and other theories, too. All were valid, but none went to the heart of the matter.

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