Inflation is skyrocketing in practically the entire world. Central banks are getting scared and beginning to announce the end of expansionary measures, also known as tapering.

Why do central banks find themselves in a dilemma? Why has inflation risen so much? What is a bottleneck? What does tapering mean, and how could it affect us? The objective of this article is to answer these, and other, questions.

Inflation Skyrocketing around the World
Central banks have one explicit mandate: to maintain the purchasing power of money. This is the main goal of monetary policy. Another mandate of some central banks is to sustain the level of economic activity (and it could be argued that they all have this as an implicit goal).

In developed countries, central banks’

The 2020 recession, which many countries are still going through, now has an “official” name: the Great Lockdown. In economic terms, the public sector’s response in practically all countries has been very swift and bold (which is not necessarily a good thing).1 This has caused the global public debt to skyrocket as never before. As a result, now more than ever, it is necessary to emphasize the dangers of public debt.
In this article, we will highlight the contrasts between this recession and the previous one (the Great Recession of 2007) to analyze the public-debt problem the world is facing. In a second article, we will analyze the economic dangers of excessive public debt.

The Public Sector Entered This Recession in a Much Weaker Position Than in 2007
During

How many times have you heard that higher taxes mean greater social welfare and economic development? The statement is backed up by a touch of popular wisdom: “More taxes, more public services.” Almost incontestable empirical evidence is also cited: with very few exceptions, the richest countries’ tax rates are very high, whereas taxes in poor countries are relatively low.
This article analyzes the statistical relationships that suggest that high tax burdens (government revenue/GDP) are linked to a high level of development (measured by GDP per capita).
We will see that the positive relationship between GDP per capita and tax burden suffers from a statistical problem known as Simpson’s paradox.

Simpson’s Paradox
The paradox got its name from the British