You have to read this fascinating piece on Zimbabwe in the NYT: “How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417. No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.... Mr. Mugabe’s government has printed trillions of new Zimbabwean dollars to keep ministries functioning and to shield the salaries of key supporters... In February, the government admitted that it had printed at least $21 trillion in currency — and probably much more, critics say — to buy the American dollars with which the debt was paid....”
Fine reporting: the article shows, perhaps not as clearly as it might have but the information is there, that price inflation is caused by printing money.
Now turn to page one of the business section, to find that in the US inflation is caused by consumer spending, while the central bank, far from printing money, is said to do the opposite of curbing people’s appetites. “Robust spending on homes, cars and other consumer goods kept the economy moving at a brisk pace and sent a critical measure of inflation higher in March, the Commerce Department reported yesterday, renewing concerns that the Federal Reserve will have to raise interest rates further.”
Thus we see how inflation in poor African countries ruled by despots is caused by a very primitive and ridiculous action of printing money. How pathetic! But in enlightened and advanced democracies, inflation is caused by consumers who buy too much, so thank goodness we have scientific economists at the Fed who know when and how to stop us from getting carried away with our desire to consume.
(A note to the commentator who always says: who cares about the NYT?!. I’m not trying to single out the paper but rather use it as a proxy for the public and media understanding of economics.)
