The economist points out that we are not facing a normal inflation crisis, so the old measures do not work.
Yesterday, Wednesday, January 18, we published the second episode of our podcast, Satoshi's voices, in which we talk about inflation, central banks and Bitcoin.
We had the great pleasure of having the collaboration of Paul Gil, trading expert and economist, and with Juan Torres, professor of economics at the University of Seville.
Between the two of them, they reviewed several outstanding topics, such as the current debt crisis, the causes of high inflation or the problems that can be caused by the continuous increases in interest rates that are applying the FED and the European Central Bank.
The economics professor left us his point of view on the inflation crisis and the measures that central banks are taking to resolve it.
“Central banks are making a mistake that will be studied in history books”
When we asked our experts if they believe that the increase in interest rates is due to a veiled attempt to provoke a crisis, Juan Torres pointed out that the central banks simply They confront inflation with a wrong theory.
Central Banks continue to think that inflation is a purely monetary problem, which can be solved increasing interest rates. However, in recent years we have seen that there are many other factors, such as climate change, supply bottleneck and speculation in food markets.
Torres explains that facing the rise in prices with a single solution is a mistake. Although part of the inflation is due to fiscal supports released during the pandemic, there are other factors that are not being attended to.
In fact, the professor explains that there is a factor that is not taken into account and that is that Demand levels have not recovered pre-pandemic values, so we are facing a “supply defect”, caused by production blockages.
In his statement, Torres highlights that we are not facing a typical demand inflation, which could be contained by raising interest rates and slowing down investment.
In this way, the rise in interest rates is causing the opposite effect. For example, they are making investment difficult, “making a mistake that will eventually be studied in economic history books”, since they did not detect the problem that was brewing.
Furthermore, they have made a mistake with the treatment and They do not answer the main cause. They have focused on a single point, when it is necessary to act on all of them.
Finally, Torres points out that the strategy of raising interest rates to stop inflation is like “kill the sick person so that his fever does not rise”, something that doesn't make sense.
