The surge in global inflation following the relaxation of pandemic restrictions is a tectonic development that will alter economic and political outcomes for years to come. It is already clear that the conventional neoliberal medicine for this problem — monetary tightening being pursued aggressively by central banks around the world — will be worse than the disease.

Financial markets are falling sharply, riskier assets (from cryptocurrency to emerging market debt) are collapsing, and the overvalued real estate bubble prices are bursting. There is a growing consensus, even among mainstream economists, that an international recession is imminent, possibly sparking another broader financial crisis.

In this context, it is clearly not the inflation itself but the unthinking and unapologetic application of conventional neoliberal anti-inflation policy that is the bigger problem. Central bankers acknowledge that the causes of this inflation are unique and — to some extent — temporary side effects of the pandemic.