For many months now, the US President has been furious. A lifelong debtor, he demands cheaper money. The Fed is clearly in his firing line. But curiously, across financial markets, while there has been much commentary, there has been little reaction. Why? Through their assumed control of the money supply — or colloquially the printing press — the keyassumption of concerned commentators is that central banks determine inflation. As summarised well byTim Harford in the Financial Times: “Friedman was oversimplifying when he declared that inflation was always and everywhere a monetary phenomenon. But the statement is not far wrong and…

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