Inflation in the rich west has been remarkably controlled since the huge liquidity injections of 2001.

But a rise in inflation would lead to restrictive action – interest rate rises – by central banks, most of whom are now under a mandate to keep inflation in check.

Higher interest rates will make the western consumer feel poorer, especially as asset prices – homes, for example – drop. This will reduce demand for goods from China and the rest of Asia and undermine the support for political arrangements premised on delivering the life-style goods.

The OECD report that we will be using as our measure

The Economist on the question

Tony Curzon Price’s article on Friedman and the 2001 liquidity injection

Many thanks to GrahamMaclellan for the balloon