Inflation, What have we gotten ourselves into?
2022 was the year when two old phantoms, well-known but thought forgotten, reemerged with force in Europe.
The first and most feared, the war, has led many countries into a situation unknown since the Cold War, many believing we would be lucky enough to never experience it. The second phantom that reemerged was inflation, reaching levels not seen in over 30 years and changing the course of economic policy across the globe.
nflation does not cause bloodshed or destroy cities, but it is also known to be devasting; if not properly controlled, it can compromise the development of a country and the prosperity of future generations.Throughout 2022, there was much talk about the causes and effects of inflation. The war and the subsequent rising costs of energy and raw materials have been identified as the main triggers for the overall increase in prices. It has also been said that the savings generated and incentives deployed during the Covid years were the breeding ground that facilitated its emergence. The rising cost of living and attempts by the European Central Bank (ECB) and the Federal Reserve to tame inflation were some of the main headlines of the year.
But among all the noise, it has been difficult to find thorough analyses to help get clarity and make better decisions in face of this situation. What is inflation and what causes it? What makes it so important that entire institutions have been created just to control it? What factors have led to the reemergence of inflation in 2022? What keys can we find in recent history that help us best handle this situation?