The real cost of public sector pay

Bumper pay rises for doctors and teachers are bound to result in higher inflation

THE 2020S HAVE DEMONstrated, yet again, that inflation is always and everywhere a monetary phenomenon. After the Bank of England overreacted to the Covid-19 pandemic in spring 2020 with needlessly large asset purchases, the increase in the quantity of money (on the M4x measure which the Bank itself favours) reached 15 per cent in February 2021. Although many people seem to be baffled by the processes which connect money and the price level, double-digit inflation became very likely. Somewhat absurdly, the Governor of the Bank of England has denied that money was relevant to the recent inflation episode. Andrew Bailey used a recent speech — to fellow central bankers, at a get-together in Jackson Hole, Wyoming — to blame it on the Ukraine war and other alleged shocks from abroad.…

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The Critic (Digital) - 1 Issue, October 2024

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