Earlier this month, I mocked CNN for a nonsensical tweet about inflation.
The network said there was no consensus about the cause of inflation even though it is glaringly obvious that the Federal Reserve’s bad monetary policy is responsible.
The title of that column was “The Most Economically Illiterate Tweet of 2023?” and you may wonder why I hedged by including a question mark.
I hedged because of a nagging suspicion that I would see an even dumber tweet before the end of the year.
Well, I only need to wait a couple of weeks. The International Monetary Fund issued this tweet and it unquestionably wins the “prize” for economic illiteracy.
This is a maliciously misleading tweet.
The cause of European inflation is bad monetary policy from the European Central Bank (ECB).
The ECB made the same mistake as the Federal Reserve, dramatically increasing the supply of money as a panicked response to the pandemic.
That’s forgivable. But the ECB (like the Fed) kept dumping money into the economy even after it became obvious that the pandemic wasn’t going to cause an economic collapse.
At the risk of understatement, central banks are responsible for inflation. The fact that some of that inflation has shown up as corporate profits is not meaningful.
P.S. The unanswered question is why the IMF would publish such a maliciously misleading and inaccurate tweet. I’m guessing it is because the IMF represents the interests of governments. And since politicians would rather blame corporations for inflation than accept responsibility for their subpar appointees to central banks, the IMF did their bidding. Yet another reason to shut down this bureaucracy. In any event, I feel sorry for the economists at that bureaucracy, most of whom must be embarrassed.
