Introduction to Money and Inflation at the Time of Covid

Tim Congdon ()

A chapter in Money and Inflation at the Time of Covid, 2025, pp 1-24 from Edward Elgar Publishing

Abstract: The Introduction notes the prevalence among economic forecasters in early 2020 of the view that the Covid-19 pandemic would lead to years of disinflation or even deflation. This view was shown to be wrong in 18 months. Late 2021 and 2022 saw sharply rising inflation, with most developed countries reporting in late 2022 the highest inflation numbers (on a backward-looking annual basis) for 40 years. By contrast, the author of this book said in late March and April 2020 that the money growth explosion then being engineered by central banks and finance ministries would lead to more inflation and risked inflation at double-digit annual rates. The author's conjecture turned out to be right. The book's purpose is to explain why he was right and practically all of his profession wrong. He differentiates his “broad-money monetarism” from other points of view, including other monetarist approaches. He is particularly critical of the currently fashionable three-equation New Keynesianism, which gives undue prominence to the IS function of textbook theory and the IS-LM model.

Keywords: Money explosion; Velocity of circulation; Monetary financing; Keynesian IS function; IS-LM model (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035328963
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