Most people associate ‘inflation’ with rising prices, but the disease goes much deeper than that. Inflation is a phenomenon wherein money becomes so abundant it disrupts relative price formation and hence interferes with the vital transmission of information about the state of the countless interactions of supply and demand, plenty and scarcity, which take place on the market. As the fever rises, mistakes accumulate, conflicts intensify, timings clash, finances become stretched, and coherence is lost. A rising price is one thing. Prices -plural- rising at varying speeds and in an ever less predictable manner is a much more dangerous pathology.
A recent, long post on Linked-In relates the story of how an attempt to set up a business recycling aluminium cans in the city of Toulouse in France failed for reasons of cost, lack of customer appetite, and ultimately out of the sheer technical impossibility of achieving the desired 100% ‘Green Loop’ for which the enterprise – La Boucle Verte’- was named.