, Columnist
Economically Speaking, It Was a Surprisingly Normal Year
Sometimes the most established doctrines have the most explanatory power.
Classical economics at work.
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This year has turned out to be a very good one for classical and traditional approaches to economics. Exotic doctrines have performed poorly, while standard predictions — based on common sense and straightforward mechanisms of operation — have done well.
Start with macroeconomics. The big story of the year has been inflation, and the two biggest culprits are in line with standard theory: growth in the money supply and hikes in energy prices. Over a recent two-year period, the US Federal Reserve allowed the M2 money supply to rise by about 40%. It is no surprise that prices increased so much.