Prices are rising. Money is worth less than it did a month ago, and a lot less than it did a year ago. Central banks, who have the ability to reverse inflation by raising interest rates, have been slow to react. They worry that higher interest rates can trigger a recession. But the effects of inflation are a lot more destructive than those of a recession, argues Eammon Butler.

Our financial authorities seem to think that inflation is nothing to worry about, and is far better than falling economic growth and recession. They are wrong. Inflation is the most universally destructive force known to economics.

SUGGESTED READING Recession is the threat, not inflation By David Blanchflower Since the financial crisis, the Bank of England has seemed desperate to prevent even a short economic contraction. It slashed interest rates, holding them at ‘emergency’ levels for over a decade. With prices rising, real interest rates became negative, and still are. At the same time it flooded us with ‘quantitative easing’ Monopoly money. The hope was that the ultra-cheap borrowing would induce entrepreneurs to start and grow businesses, while ultra-abundant cash would induce customers to buy their stuff. Up to a point, that worked: over the last few years, the UK’s economic growth has still exceeded its European neighbours (despite Brexit, as they say). But it is fantasyland growth.