The recent lift in the United States annual inflation rate to 4.2 per cent, the highest in ten years, has caused fears that the massive injection of money into the economy (33 per cent in the latest month) might now be igniting a general lift in prices. Below is the Consumer Price Index (in red) and money growth (in black). 

Many will, however, argue that predictions of runaway inflation have not materialised in the recent past.     

Views on the relationship between prices, output, government deficits and money supply have gone through major transformations.