International
Inflation will probably melt away in 2022 – central banks will do far more harm trying to tackle it
The economy doesn’t have a real inflation problem, and not recognising the difference is the biggest danger.

It remains to be seen whether the omicron variant will shift Sars-CoV-2 towards becoming manageably endemic. But as and when this happens, there will still be “long COVID” to contend with. The latest headlines about inflation – a 7% annual rise in the US and more tough talk from Federal Reserve Chairman Jerome Powell about bringing it down – confirm that something similar is happening with the global economy: it will be shaped by the after-effects of the pandemic even when all restrictions have been lifted.
To understand how this overhang effect may play out in 2022 requires looking back at how the pandemic has affected growth and inflation. The key lies in decisions taken after the initial phase in 2020 when governments shut down large parts of their economies while compensating households and businesses for lost income to prevent an economic depression. People both saved more than usual and redirected their spending from services like eating out or travel to goods for the home – notably digital equipment for remote working and leisure.
Such goods started running out of stock and it took longer than usual for supplies to recover, not least because COVID restrictions had hit the global supply chain. The same went for other key consumer requirements such as energy: as demand for oil rebounded, the supply was constrained either by political decisions, such as the Opec+ cartel declining to raise production, or the financial fragility of US shale oil producers.
Shortages have caused inflationary pressure, which has also been aggravated by factors linked to the climate emergency. Since replacing coal with a “greener” fossil fuel in electricity generation is one of the quickest ways to reduce greenhouse gas emissions, there has been increased demand for natural gas. And in food markets, agricultural production has been damaged by the growing frequency of extreme weather events.
Misapprehensions about inflation
In many advanced industrial countries, headline inflation rose by the end of 2021 to its highest level in two decades: that annual rate of 7% in the US in December, and 5% in the eurozone (the two regions measure inflation in slightly different ways).
Meanwhile, the bounce in world economic growth in 2021 after the initial pandemic slump has been naturally giving way to a slower pace of growth. This is in line with more normal trends now that major economies have returned to, or are approaching, their pre-pandemic levels of output. This combination of slowing growth and rising prices – often labelled “stagflation” – is pernicious if it continues, attracting widely voiced concerns as 2021 wore on.
I would argue, however, that this threat is exaggerated. It stems to a considerable extent from a confusion between an increase in price levels and genuine inflation defined as persistent and volatile increases in the rate of price growth. This is a subject close to my heart, which I discuss in my 2013 book Remembering Inflation.
The price rises can be largely explained by this problem of suppliers being unable to provide enough goods to meet the rebound in consumer demand. And one key development which became apparent by the end of 2021 was that the supply of manufactured goods had recovered sufficiently to correct this inflationary imbalance.
UK inflation, 1960-present
China has made the running here, along with other Asian manufacturing powerhouses. In November 2021, manufacturing inventories in Japan, South Korea and Taiwan were 20%-30% higher than the previous month. More generally in December, global industrial output was 12% higher than a year earlier, having shown a 5% annual contraction as recently as September.
This suggests not only that the stagflation threat will recede, but also that a “wage-price spiral” characteristic of any serious inflationary episode, is increasingly unlikely: this is where workers are able to demand higher and higher wages to make the rising cost of living affordable, which in turn further pushes up prices.
The central bank dimension
It follows that major central banks may err in going too far in their declared intention to raise interest rates to control inflation. The Bank of England has led the way by announcing its first post-pandemic rate hike in December (from 0.1% to 0.25%).
As for America, financial markets are pricing in a first rate hike by the US Federal Reserve in March – the same month as it aims to stop buying bonds and other financial assets as part of its quantitative easing (QE) programme to prop up the economy. Even the more doveish ECB recently announced a trimming of its QE programme, though it has no plans to raise interest rates this year.
Several commentators think these moves don’t go far enough. They argue that given the persistent threat of inflation, central banks should raise rates more aggressively and offload assets bought under QE programmes – which the Fed has signalled it might start doing by the middle of this year.
The difficulty for central banks is that prices could certainly keep increasing for a while. For instance, when the omicron wave subsides, demand for services like restaurants or travel should recover. Yet rather like someone with long COVID, the supply side in many of these industries remains “scarred”: numerous service businesses closed during the pandemic – witness the shuttered retail premises on high streets – and it can take time to raise working capital and re-hire the staff required to reopen. So just like in 2020-21 as regards goods, extra demand chasing too little supply could now push up prices in services.
Though raising interest rates won’t solve this problem, it’s the potential for a resulting wage-price spiral that is worrying central banks. Numerous developed countries have already been seeing pressure on wages developing naturally from the recovery of employment, since this means employees are in higher demand. This trend is being further intensified by labour shortages, largely caused by impediments to migration such as the difficulty of applying for H1B visas to the US and the UK government’s post-Brexit strategy of reducing migrant labour inflows.
Though concerns about wage pressure are well founded, they should nevertheless be offset by an important disinflationary impulse likely in 2022. In China, the first major economy to recover from the pandemic, the authorities are now relaxing monetary and fiscal policy (government spending) to counter the ensuing slowdown. But unlike previous Chinese stimulus drives in the years between the global financial crisis and the pandemic, which largely drove global growth, this latest easing only seeks to stabilise the economy. The Chinese fear further increases in the country’s indebtedness and the associated threat to stability.
With global supply chains returning to some kind of normality and China in this cautious mode, the overall effect will probably be that inflation eases of its own accord. If so, raising rates and quickly rolling back QE will just choke off recovery at a time when many countries are barely on their feet after COVID. The next problem could well end up being slowdown or even recession.
Brigitte Granville does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
recession depression pandemic stimulus economic growth global growth bonds qe fed federal reserve recovery interest rates stimulus oil south korea japan uk chinaInternational
US Sent Billions in Funding to China, Russia For Cat Experiments, Wuhan Lab Research: Ernst
US Sent Billions in Funding to China, Russia For Cat Experiments, Wuhan Lab Research: Ernst
Authored by Mark Tapscott via The Epoch Times…

Authored by Mark Tapscott via The Epoch Times (emphasis ours),
Hundreds of millions of U.S. tax dollars went to recipients in China and Russia in recent years without being properly tracked by the federal government, including a grant that enabled a state-run Russian lab to test cats on treadmills, according to Sen. Joni Ernst (R-Iowa).
Ernst and her staff investigators, working with auditors at the Government Accountability Office (GAO) and the Congressional Research Service, as well as two nonprofit Washington watchdogs—Open The Books (OTB) and the White Coat Waste Project (WCWP)—discovered dozens of other grants that weren’t counted on the federal government’s USASpending.gov internet database.
While the total value of the uncounted grants found by the Ernst team is $1.3 billion, that amount is just the tip of the iceberg, the GAO reported.
Among the newly discovered grants is $4.2 million to China’s infamous Wuhan Institute of Virology (WIV) “to conduct dangerous experiments on bat coronaviruses and transgenic mice,” according to a May 31 Ernst statement provided to The Epoch Times.
The $4.2 million exposed by Ernst is in addition to previously reported funding to the WIV for extensive gain-of-function research by Chinese scientists, much of it funded in whole or part prior to the COVID-19 pandemic by National Institutes for Health (NIH) grants channeled through the EcoHealth Alliance medical research nonprofit.
The NIH has awarded seven grants totaling more than $4.1 million to EcoHealth to study various aspects of SARS, MERS, and other coronavirus diseases.
Buying Chinese Puppy Parts
As part of another U.S.-funded grant, hearts and other organs from 425 dogs in China were purchased for medical research.
“These countryside dogs in China are part of the farmer’s household; they were mainly used for guarding. Their diet includes boiled rice, discarded raw food animal tissues, and whatever dogs can forage. These dogs were sold for food,” an NIH study uncovered by the Ernst researchers reads.
Other previously unreported grants exposed by the Ernst team include $1.6 million to Chinese companies from the federal government’s National School Lunch Program and $4.7 million for health insurance from a Russian company that was sanctioned by the United States in 2022 as a result of the invasion of Ukraine.
“It’s gravely concerning that Washington’s reckless spending has reached the point where nobody really knows where all tax dollars are going,” Ernst separately told The Epoch Times. “But I have the receipts, and I’m shining a light on this, so bureaucrats can no longer cover up their tracks, and taxpayers can know exactly what their hard-earned dollars are funding.”
The problem is that federal officials don’t rigorously track sub-awards made by initial grant recipients, according to the Iowa Republican. Such sub-awards are covered by a multitude of federal regulations that stipulate many conditions to ensure that the tax dollars are appropriately spent.
The GAO said in an April report that “limitations in sub-award data is a government-wide issue and not unique to U.S. funding to entities in China.”
“GAO is currently examining the state of federal government-wide sub-award data as part of a separate review,” the report reads.

The Eco-Health sub-awards to WIV illustrate the problem.
“Despite being required by law to make these receipts available to the public on the USAspending.gov website, EcoHealth tried to cover its tracks by intentionally not disclosing the amounts of taxpayer money being paid to WIV, which went unnoticed for years,” Ernst said in the statement.
“I was able to determine that more than $490 million of taxpayer money was paid to organizations in China [in] the last five years. That’s ten times more than GAO’s estimate! Over $870 million was paid to entities in Russia during the same period!
“Together that adds up to more than $1.3 billion paid to our adversaries. But again, these numbers still do not represent the total dollar amounts paid to institutions in China or Russia since those numbers are not tracked and the information that is being collected is incomplete.”
Adam Andrzejewski, founder and chairman of OTB, told The Epoch Times, “When following the money at the state and local level, the real corruption exists in the subcontractor payments. At the federal level, the existing system doesn’t even track many of those recipients.
“Without better reporting, agencies and appropriators don’t truly understand how tax dollars were used. We now know that taxpayer dollars are traded further downstream than originally realized with third- and fourth-tier recipients. These transactions need scrutiny. Requiring recipients to account for where and how they actually spend each dollar creates a record far better than agencies are capable of generating.”
Read more here...
Spread & Containment
COVID-19 Testing Resumes In Beijing, Shandong, As Reinfection Cases Surge
COVID-19 Testing Resumes In Beijing, Shandong, As Reinfection Cases Surge
Authored by Alex Wu via The Epoch Times,
China has resumed COVID-19…

Authored by Alex Wu via The Epoch Times,
China has resumed COVID-19 PCR testing in Beijing and Shandong Province amid rising re-infections, while the regime’s top health advisers have warned of a new wave of mass infections.
Since May 29, mainland netizens have posted on Chinese social media platforms that PCR test kiosks in Beijing are quietly back in business.
Mainland media “City Interactive,” a subsidiary of Zhejiang “City Express,” reported on May 30 that one of the PCR testing booths that netizens posted about was in Beijing’s Xicheng District, where the central government and the Beijing municipal government are located.
The staff of that testing kiosk said that the PCR test there has never stopped, reported “City Interactive”, without being clear how long it had been open.
“We have been doing nucleic acid testing in Xicheng District, but I’m not sure about other districts in Beijing,” a staff member said.
The staff member said the laboratory she works for is mainly responsible for nucleic acid testing within Xicheng District. Currently, there are more than ten testing points outdoors, and one person is on duty for each booth from 9:00 am to 5:00 pm.
Residents get swabbed during mass COVID-19 testing in the Chaoyang District in Beijing on June 14, 2022. (Andy Wong/AP Photo)
A testing kiosk in Chaoyang District, Beijing’s central business district, has been operating since March, reported “City Interactive.” The testing booth staff said it is in the health center near Jinsong Middle Street.
Ms. Wang, a Beijing resident, told The Epoch Times on May 28 that some people have taken the PRC test while others have chosen not to.
She said many people around her, including her child, have already re-infected twice.
“This time, the symptoms seem to include a high fever and then sore throat, very painful,” she said.
“Most people are just resting at home now. Seeing a doctor is very expensive, and now many medicines are paid for by ourselves.”
Gao Yu, a former senior media person in Beijing, confirmed what Wang said. She told The Epoch Times that the relatives around her have been re-infected two or three times, and most are just resting it off at home.
Shandong Resumes Testing
PCR testing booths in Qingdao City, Shandong Province, have also reopened.
A “Peninsula Metropolis Daily” report included a screenshot of an online notice posted by the Laoshan District Health Bureau in Qingdao, which announced that from May 29, the district will conduct COVID-19 PCR testing for “all people who are willing.”
It also listed the working hours of the testing sites, from 7:00 am to 4:00 pm, seven days a week.
Another mainland Chinese media, “Xinmin Evening News,” reported on May 31 that the staff in the district bureau confirmed that the testing has resumed and is for free.
Next Wave
Zhong Nanshan, China’s top respiratory disease specialist, predicted on May 22 that a new wave of COVID-19 infections in China will likely peak in late June when weekly cases could reach 65 million. Then, one Omicron-infected patient will be able to infect more than 30 people, Zhong said, adding that the infection is difficult to prevent.
A security personnel in a protective suit keeps watch as medical workers attend to patients at the fever department of Tongji Hospital, a major facility for COVID-19 patients in Wuhan, Hubei Province, China, Jan. 1, 2023. (Staff/Reuters)
Chinese citizens across the country have said on social media that infections have been swelling since March.
Zhong also said there had been a small peak in infections at the end of April and early May.
Most COVID-19 infections in mainland China are currently caused by the XBB series mutant strains of Omicron. Among the locally transmitted cases, the percentage of XBB series variants increased to 83.6 percent in early May from 0.2 percent in February.
Zhang Wenhong, China’s top virologist and director of China’s National Center for Infectious Diseases, also warned in late April at a conference that COVID-19 infections would reoccur after six months when immunity gained from prior infections has worn out.
Government
Florida ‘freakishness’: why the sunshine state might have lost its appeal
Florida’s image as a safe sun and theme park destination may be threatened by recent political divisions and gun crime.

Florida is known worldwide for its beaches, resorts and theme parks, but has recently made headlines for a different reason. The state has been rocked by political controversies, bitter debates and fatal shootings at odds with its previously laid back holiday destination image.
In his 1947 book, Inside USA, writer John Gunther described Florida’s “freakishness in everything from architecture to social behaviour unmatched in any American state”. If Gunther had been writing today, he might be just as judgemental.
Florida’s recent political turmoil can be attributed to some highly contentious policies. The state has witnessed heated debates and legislative battles on issues including abortion, gun control, education, LGBTQ+ rights and voting rights.
Florida has been derided as “the worst state” in which to live, one of the worst in which to be unemployed or a student, and not a good place to die.
Even Donald Trump, who moved to his Florida Mar-a-Lago home during his presidency, has called it “among the worst states” to live in or retire to. This was an attack on Florida governor Ron DeSantis, who is also running for the Republican presidential nomination.
What was once considered by many to be a purple state – one that could either be Republican or Democrat – is now fiercely Republican. In recent years, the divide between those of different political beliefs has become toxic.
Importance of international image
International tourism and trade is huge business for Florida. In 2022, more than 1.1 million people visited Florida from the UK, the second largest group of international visitors on an annual basis. The UK is also Florida’s eighth largest trade partner with bilateral trade reaching $5.8 billion (£4.6 billion) in 2022. So state leaders might worry about tarnishing its image abroad.
Business leaders are already fretting about a fall in international visitor numbers linked to COVID and negative media coverage of the state. Around US$50 million was invested in marketing the state to tourists in 2023, this is expected to rise dramatically in 2024. The state’s ability to attract workers to keep its tourism and other industries going is weakening, reports suggest.
Heather DiGiacomo, chief of staff at the Florida Department of Juvenile Justice, told Florida senators that applications for jobs at state-run agencies were down and staff retention was down too. “These turnover rates … impacts the number of well-trained staff available to mentor new staff and puts additional strain on current staff without longer shifts in detention.”
Republican governor Ron DeSantis, now a presidential candidate, has been at the centre of Florida’s significant political divisions. The Republican state legislature’s controversial partisan bills, such as the recent redrawing of the electoral map to benefit the Republican party, was signed into law despite intense opposition.
While his conservative policies on taxes, regulation and immigration have won strong support from conservatives, critics argue that he prioritises partisan politics over the needs of all Floridians. His outspoken handling of the COVID pandemic sparked controversy, with accusations of downplaying the severity of the virus and prioritising economic interests.
Florida’s restrictive abortion laws have also attracted national and international attention. In April 2023, the state passed the foetal heartbeat bill, which prohibits abortions once a foetal heartbeat is detected, typically at around six weeks gestation. This law has faced significant backlash from reproductive rights advocates, who argue that many individuals may not even be aware of their pregnancy at such an early stage.
School shootings and gun laws
The Marjory Stoneman Douglas High School Public Safety Act was passed into Florida state law after the tragic Parkland school shooting in 2018, in which 17 people were killed. But it was controversial because it did not place restrictions on gun ownership or introduce background checks before gun purchases, but allowed schools to employ armed “guardians”. Critics argued that it fell short of addressing the root causes of gun violence in Florida.
There were seven mass shootings in Florida in the first two months of 2023. Despite this, the state has just passed a law that will come into effect on July 1 that will allow anyone who can legally own a gun in Florida to carry one without the need for a permit.
Florida’s partisan divide has been exacerbated by the introduction and passage of several laws that discriminate against the LGBTQ+ community. These laws cover areas including adoption, education, and transgender rights.
This year a massive LGBTQ event in a Florida theme park, which typically attracts 150,000 people, is taking out extra security measures, after new “don’t say gay” state laws were introduced in 2022. These rules ban teachers from discussing topics including sexual orientation. More generally, travel advisory warnings have been issued on the risks of travel to the state for LGBTQ+, African American and Latino people. A recent federal ruling overturned municipal bans on conversion therapy.
Although the “don’t say gay” bill was originally only aimed at third grade students and under, the bill has since been extended by Florida’s Board of Education to apply to all school pupils.
DeSantis has also become embroiled in a long legal and political battle with the Walt Disney Company, a major state employer, over the “don’t say gay” legislation. Disney recently announced it was cancelling a US$1 billion office complex project in the state.
Bills that restrict transgender students’ participation in school sports teams consistent with their gender identity have also sparked heated debate.
Meanwhile, changes in voting laws brought in by the state, including stricter identification requirements and limitations on the drop boxes where voters can leave mail-in ballots, have been criticised for making it more difficult for some people to vote.
Florida’s recent political turmoil has thrust the state into the national, and global, spotlight. Its deeply partisan divide, controversial policies and gun laws have created a toxic political climate, which has the ability to significantly damage the sunshine state’s appeal.
Dafydd Townley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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