David McWilliams: Ultimately, uncontrolled inflation will be followed by a recession

To understand what is happening, let’s go right back to where money started

If prices rise in Ireland faster than the rest of the EU, we have no policy tools like interest rates or exchange rates to dampen local demand. Photograph: Getty Images

If prices rise in Ireland faster than the rest of the EU, we have no policy tools like interest rates or exchange rates to dampen local demand. Photograph: Getty Images

Inflation concerns us all as the value of money is being eroded by higher prices. To understand what is happening, let’s go right back to where money started. Herodotus’s Histories (4th century BC) tells us that the Lydians were the first people to use money and coins. Their king was the misfortunate Midas.

According to legend, and contrary to his modern image as a greedy man, Midas was a poor but generous king who opened his doors to all comers. Unknown to the kindly Midas, one of his guests was the foster father of Bacchus, the Greek god of good craic. Impressed by Midas’s spontaneous generosity, and despite Midas’s own privations, the foster father told Bacchus of this charming, poor yet generous king in a parched land.

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