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“If you think about the concept of
inflation, it is really more money
chasing fewer goods,” he explains.
“That’s what translates monetary
inflation into consumer price
inflation.
“People aren’t spending much at
the moment. But once we get back
to normal and people have assessed
what goods and services they want in
regular day-to-day life, they will start
chasing those with money.”
Unlike in the aftermath of the
financial crisis when quantitative
easing got locked up in the balance
sheets of the banks – which led to
inflation in asset prices, but not in the
“Once we get back to
normal and people have
assessed what goods and
services they want in
regular day-to-day life,
they will start chasing
those with money”
real economy – Ruffer’s investment
director Bertie Dannatt says this
time it is going directly to businesses
and individuals, or “people who will
spend, because they need to”.
Smeaton says it is generally bad
news when high inflation is produced
in this way, as the government has
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