Inflation originates from policy #75

In this podcast, I dissect the cause of #inflation. I explain why inflation is everywhere a monetary phenomenon, and that #interestrate reflects the cost of money. While erring on the side of inflation may be worthwhile to ensure #investment (as deflation causes under-investment), loose policies lead to #malinvestment (#bubbles).
Hence, to cure inflation, one can only use monetary and fiscal policies. This means higher cost of money (#ratehikes) and lower spending (#austerity).