Conventional economic thinking 2022

Mark McIlroy

30 April 2022



This is my article on convention economic thinking in the year 2022.


1. Governments start to run a budget deficit for a reason such as Covid 19.

2. The budget deficit is funded by printing money, which after a delay causes inflation.

3. Central banks mistakenly believe that the inflation can be reduced by reducing economic activity so they raise interest rates.

4. Due to higher interest rates, economic growth falls.

5. To counteract falling growth the government runs a higher deficit.

6. Inflation is caused by the budget deficit, so the continuing budget deficit maintains high inflation.

7. Go to step 3.


8. Inflation should return to low levels once governments return to balanced budgets.