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Josh L. Ascough

Articles by Josh L. Ascough

Low Interest Rates and High Taxes Won’t Help against Inflation: The Economy Needs Savings and Real Investment

August 15, 2022

With the Consumer Price Index (CPI) hitting a forty-year high of 9.1 percent, the Bank of England has responded by raising interest rates to 1.25 percent, up by 0.25 from the previous period. This, alongside ex-chancellor and PM hopeful Rishi Sunak planning to “tackle inflation before tax cuts,” signals a poor plan for combating the rising effects of inflation.
First, inflation must be defined by its cause rather than its effect for the monetary authorities to enact a sound recovery policy.
Inflation in the truest sense is an excess increase in the money supply over the real demand for money (MS > MD). MD, which is an inverse of velocity, is measured by the quantity of nominal pounds sterling economic actors hold over a period of time in order to acquire a higher

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