A brief history of inflation

This is the final part of my Fund Strategy cover story on inflation – a short chronology on the subject.

Early 1920s – The Weimar hyperinflation in Germany. Vast amounts of money were printed to help pay for war reparations.

1930s – Great Depression and falling prices.

1970s – A decade of high inflation. Some blamed the quadrupling of oil prices that followed the Arab-Israeli War of 1973. Others attributed it to a large increase in the American money supply.

Early 1980s – The heyday of monetarism. Conservative governments in America and Britain encouraged tighter monetary policy to squeeze high inflation.

1990 – The end of Japan’s “bubble economy” as asset prices collapsed. Since then Japan has suffered from bouts of deflation and policymakers have often encouraged monetary expansion.

1990s – Several important changes at the Bank of England including the adoption of inflation targeting (1992), the publication of the first Inflation Report (1993) and operational independence (1997).

1997-8 – The Asian financial crisis raised fears about the prospect of another global depression.

1998 – Creation of European Central Bank as part of the establishment of the eurozone .

2008 – Global financial crisis followed by economic recession.

2009 – In America the Fed started credit easing. Shortly afterwards British interest rates were reduced to a historical low of 0.5% and quantitative easing (QE) was introduced.

2010 – Second round of QE in America.

2011 – Second round of QE in Britain.