Inflation is a monetary phenomenon

We've written before that inflation is everywhere and always a monetary phenomenon. This morning during a brief televised interview, Gerry Frigon made that point and countered the notion that economic growth creates inflation.

The idea that economic growth creates inflation, and that economic stagnation or contraction counteracts inflation, is associated with the Phillips curve, and history has proven the Phillips curve to be wrong.

We have written about this discredited concept in the past, and would recommend investors revisit those posts, since many in the news media continue to base their comments on the idea that growth and inflation are linked together (see for example here and here). We have also noted troubling signs which indicate that high-ranking economists still subscribe to outdated Phillips-curve thinking.

With the renewed focus on inflation, this is an important principle which investors should understand.

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