Most commentators fixate on the impact of inflation in 1970s. Sure inflation was high. Interest rates were high. Wages were high. Taxes were high. And so on and so forth.
However, the real body blow to most families in the 1970s came from shortages. Petrol was rationed as cars with odd and even numbers took it in turn to join the miles long queues at the petrol station. And often when you finally had the petrol pumps in your sights the sign came "NO MORE PETROL TODAY". At that point the price of petrol is not a factor because you have none left in your car except for what you squirrelled away in a can in the boot.
When the power is out. When the water does not run through the tap. When the gas does not reach your heaters. When.... These are the times you, your family, and your community are truly impacted by that excess money supply [M2] created by your Central Bank.
Your are building a home and you go to the site to monitor progress. The workers that you saw yesterday are no longer on the job. Where are they? You discover that they were offered more money to work on a site down the road. So you decide to pay more money for your next crew of painters, plasterers, brick layers, etc. But you can not find these trades people even at the increased rates that you are now willing to pay. Eventually you assemble a crew but they are not the quality trades people you need to complete the job.
We have come to expect a constant and a reliable supply of goods and services [see photo]. What will happen when that is no longer the case? Well you might get your answer to that question sooner than you think.
Richard.
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