Sir Stafford Cripps, the Labour Chancellor in office just after World War II, put it very succinctly when he described inflation as ‘too much money chasing too few goods’. When the government prints lots of money to stop the economy from nose-diving into recession, this creates inflation. Prices and wages rise. The stock market booms and so does the property market. Why? Because, generally speaking, there are only a fixed number of shares and houses on offer. Lots of extra money in the financial system just pushes prices up further. There is much talk about the death of inflation, but when have you known prices to stay the same or to go down over a really long period of time?
