Cabbages to Oil: Inflation’s Many Fathers
But where the dollar goes may be the most important factor for Asia.
Not a sideshow.
Photographer: Topic Images/Getty Images
In the words of economist Milton Friedman, inflation is “always and everywhere” a monetary phenomenon. But if you asked a brokerage analyst in Singapore why prices were soaring in 2007, the response might well have been, “Ah, bus fares went up.”
That was then. When the general price level is not a problem (like now), there’s little interest in studying food or fuel costs, exchange rates or even the more expensive haircuts and meals that people associate with dearness in a tight labor market. But peacetime is when central banks have to prepare for the coming war, lest they be caught on the wrong foot, and Friedman’s critique returns to haunt them.