Monetarism — The Walking Dead of Economics…

Duncan Poundcake
7 min readMar 2, 2021

Does Government money supply create inflation?

Even though monetarism was quietly retired in the UK nearly 40 years ago (because it didn’t work) here we are in 2021 and every mainstream politician and economic pundit, still frames their argument for not spending for public purpose, as if it does.

Though the UK Government can create as much Sterling denominated money as it wants, whenever it wants, it can’t spend it, if what it wants to purchase is not for sale. PPE being a fine example. Hancock told us “Money is not problem” but he wasn’t able to buy the PPE, as it wasn’t available. What was available, every Government in the world was trying to buy it at the same time. Did the Govt overpay for PPE? Undoubtedly but it wasn’t the spending that caused the inflation in prices but the lack of resources. Namely, PPE.

The best teacher is always history.

When OPEC cut production and hiked the price of oil in October 1973, it immediately made oil an expensive. 70% more expensive and a scarce resource that became biddable. All Governments were trying to buy it and up went the price. UK Inflation hit 25% in 1975 but this had NOTHING to do profligate spending by the Wilson Government and everything to do with a strategic, economic resource suddenly…

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Duncan Poundcake
Duncan Poundcake

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