Danny Blanchflower and Mark Blyth: Have central banks overcooked their response to the rising rate of inflation?

Danny Blanchflower and Mark Blyth in The Herald:

The logic behind [interest] rate rises is that making the credit of the nations’ poor more, while they are already struggling with food and fuel bills, will make them in the long run better off.

If that sounds absurd, it’s because it is. What makes it slightly less absurd is the rider that if we don’t do this people’s expectations about inflation will become ‘unhinged,’ and they will ask for wage increases to compensate for their inflation losses.

And if they do that, we will end up with higher and higher inflation, which will make them even worse off. Onward, upwards, to hyperinflation and beyond! So to avoid that we need to make a sufficient number of them unemployed (hard landing) or just a bit poorer (soft landing).

For this story to be plausible, inflation must be, not just as Friedman had it, always and everywhere a monetary phenomenon. It must be always and everywhere be an acceleration prone ever-present danger. But is that the case?

More here.