Most politicians have used the “Ukraine invasion card” to justify the massive inflationary burst in 2021-2023.

It does not matter if inflation was already elevated prior to the war. Supply chain disruptions, demand recovery, wage growth… Many excuses were used to justify inflation, except the only one that can make aggregate prices rise in unison, which is the creation of more units of currency well above demand.

Inflationists will blame inflation on anything and everything except the only thing that makes all prices, which are measured in monetary units, rise at the same: Money supply growth rising faster than real economic output.

Global debt levels soared by $8.3 trillion in the first quarter of 2023, climbing to $305 trillion, nearly the record high set in the first quarter of 2022, according to the Institute of International Finance. This means almost 335% of GDP.

Rising debt is a burden on growth, and soaring public debt means higher taxes, weaker productivity and declining real wages as governments push inflationary policies to try to dissolve part of their enormous indebtedness.

Since 1960, Congress has raised the debt ceiling 78 times, according to Bloomberg. The process of increasing the debt limit has become so regular that markets barely worry about it. Furthermore, as the 2011 debt ceiling crisis showed, the impact on asset prices happened mostly in emerging economies. In 2011, Turkish and Indian debt were the most negatively impacted, while Treasuries rose.

Politicians believe that raising the debt ceiling is a social policy and that debt does not matter. Until it does. United States debt to GDP is now 123.4% and the risk of losing confidence on U.S. treasuries as the lowest risk asset is exceedingly high.

According to the University of Michigan, inflation expectations index for 5-30 years reached a 12-year high of 3.2 percent. At the same time, the consumer sentiment index declined to 63.5, compared to a pre-pandemic high of 300. The deterioration in the situation of consumers is evident.

The official narrative is that inflation is under control. However, many tend to forget that reducing inflation from 9 to 5 percent is relatively easy. The challenge is to bring it back to 2 percent.

Inflation is a hidden tax. Governments always try to hide the loss of purchasing power or blame anyone but the only reason that causes most prices to rise at once: printing money well above the actual demand for it.