There is some debate as to whether or not inflation is coming back, but it has actually been around for a long time. What is new is that it is becoming more widespread.

Money printing causes prices to rise, that's how it is, and the central banks' printing presses have been active since the beginning of the 2000s (interest rates fell following the crash of Internet stocks in 2000 and then the attacks of September 11, 2001). It was reinforced with the subprime crisis of 2008, before reaching delirious levels since the Covid pandemic and the lockdowns.

Except that, until now, this rise in prices was localized in assets - we are talking about asset inflation - such as stocks or real estate. International competition was pulling prices down, notably with China's entry into the World Trade Organization in 2001, opening up Western markets (money printing and China's entry into the WTO occurred in the same year... let's say that this coincidence was a good one). The deflation of many goods (textiles, household appliances, electronics, etc.) has resulted in a transfer of factories from Europe and the United States to Asia. This is collateral damage. But the stock markets are doing very well, as is real estate, like in Germany where prices are remarkably in line with the size of the ECB's balance sheet:



In France, the rise in real estate prices began in the early 2000s. Official statistical organizations have not measured an increase in the rate of inflation because they reduce the share of housing. Indeed, they consider that the acquisition of the primary residence constitutes an investment and that it does not have to appear in the "consumer price index". This is a highly questionable position, given that this purchase represents a normal step for most households. Moreover, it is not an investment, since it does not yield any return; it even costs money in maintenance and taxes.

This statistical bias has been criticized for some time by the European Central Bank. Thus, Christine Lagarde stated in September 2020 that if the ECB was not able to change the measure of inflation, it should "capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing". And even more recently on its website, in a considered but explicit style: "There are still some issues related to expenditure on houses and flats owned by the people who live in them and the inclusion of these costs in the calculation of the HICP. As part of its monetary policy strategy review, the ECB is currently assessing what role these may play in measuring inflation".

In short, what is new is that inflation is becoming widespread: it now affects most consumer goods, as we have shown, starting with electricity and energy in general (very costly "energy transition", etc.), raw materials, building materials, etc. Instead of affecting only home buyers, it will affect all consumers. Everyone's purchasing power will suffer... Even if the official statistical organizations still have some subterfuges (like the "quality effect" which artificially pulls down the prices of technological goods), they will be forced to recognize it this time.

There is no escaping the curse of money printing. Its consequences can be underhand or overt, immediate or delayed, gradual or brutal, but we always pay the price.

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