LUKANYO MNYANDA: How long can SA’s authorities resist the pressure to print money?
Textbooks have been ripped up but the rules of supply and demand may not be as easily discarded
When do the basic rules of economics stop being applicable? About now, it seems. I thought about this again over the weekend when I came across a quote posted on Twitter by Alexander Forbes chief economist and Business Day columnist Isaah Mhlanga: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than output.”
It’s not fashionable nowadays to quote Milton Friedman, and it does seem rather quaint at a time characterised by a global race to print money. Arguments for SA to do the same are getting ever louder, so this is probably a good time to ask if the normal rules of demand and supply should be thrown away. The people we entrust with answers don’t seem any wiser as events overtake them.