Not a day goes by without the risk of inflation increasing. On Tuesday alone, the renowned Ifo Institute reported rising retail prices. The Federal Statistical Office shows the highest increase in wholesaling in 47 years, and worries about an energy crisis that will further boost prices are growing on the Asian stock exchanges.
Some of the German economists do not contest this. Inflation can rise as it wants. ECB director Isabel Schnabel is already rowing back. While the economist in September at the Baden-Baden entrepreneur talks held out a downright bashing against many media that warned of inflation, she now explains: “It would be premature to claim that the current price dynamics will subside completely next year.” Apparently means it now: Back – march, march!
But the controversial talk show economist Marcel Fratzscher cannot be taught. He now changes his stories like others change their undershirts. A year ago, the DIW President claimed that deflation would be the bigger problem for the next few months and years. A blatant false prognosis. Others would be sacked and ashes. But Fratzscher comes up with something new again: Inflation should serve to save the world from climate change. The economy could thus be given legs for the transformation.
His suggestion that the Bundesbank once allowed higher inflation rates is scientifically dishonest. Economics and internationally recognized financial market economist Volker Wieland rightly pointed out that the inflationary environment was different, especially in the 1970s. There were double-digit inflation rates, especially in the USA.
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Warning of toxic mixture
The German proponents of inflation have been silent about the USA for months anyway. Larry Summers, the former US Treasury Secretary and Harvard economist, warns of a toxic mix in the US. The spending programs are oversized and would contribute to the overheating of the US economy. Summers is not known for extreme economic positions.
Should the US slide into stagflation, Europe would also have a problem. The next federal government and also the ECB should deal quickly with inflation and fight it. Once the toothpaste is out of the tube, you can no longer put it in.
More: The federal budget is developing into an inflation turbo