Economically speaking, it was a surprisingly normal year
Sometimes the most established doctrines have the most explanatory power
Add BT as a preferred source
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 per cent. It is no surprise that prices increased so much.
Not long ago, economists insisted that demand shortfalls were perpetual and that stimulus was almost never excessive. That extreme version of the Keynesian view has been laid to rest, while a version of Milton Friedman’s monetarism is ascendant once again.
TRENDING NOW
Digital Realty, STT GDC among data centre operators awarded 50 MW of new capacity in Singapore
Jardine C&C selling Singapore, Malaysia dealerships to Indonesia’s Chandra Asri for US$221 million gain
When every phone becomes a satellite phone, what happens to Asia’s telcos?
‘How come you’re so young?’: Gen Z couple takes on Singapore’s established bullion dealers
