MONEY AND THE CURRENT INFLATIONARY CRISIS

Marius Gust ()
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Marius Gust: ”Constantin Brancoveanu” University of Pitesti, Romania

Contemporary Economy Journal, 2024, vol. 9, issue 2, 80-94

Abstract: The year 2021 marked increases in inflationary processes in many countries, the phenomenon accelerated in 2022 and began to fade in 2023. The phenomenon was present, with different dynamics, in all European states, but also countries on other continents, such as the USA. The analyzes of the process have located the causes in the global prices of energy products, food prices, the Russian-Ukrainian war, the intensification of blockages at the supply level and in the supply chains, the recovery of domestic demand, against the background of the reopening of the economy following the pandemic crisis, etc. Certainly all of this had an impact, but most analyzes neglect the relationship between prices and money. Most of the world's economies after the financial crisis of 2007-2010, applied policies of quantitative easing, through which the central bank buys securities from the financial market and, in return, feeds the economy with money, which had the effect of increasing currency stocks in circulation. Later, starting in 2020, the pandemic crisis shut down the economy, the supply of goods and services falling in varying proportions, but central banks continued to issue impressive amounts of currency. Accordingly, this paper attempts to argue that the real cause of the inflationary crisis, which began in 2021, is the surplus of currency that existed and still exists in the economy.

Keywords: inflation; causes; money; aggregate supply (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2024
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