The folks at the Financial Times blog, FT Alphaville, are running around like chickens with their heads cut off because inflation is approaching 3¼%:.

They refer to the number as “dismal”, and note that, “While today’s reading won’t surprise the BoE — it expects inflation to average 3.2 to 3.3 per cent in the fourth quarter and circa 3.5 per cent early in 2011 — there’s bound to be (further scepticism) that the inflation genie will be back in the bottle by the end of 2011.”

These are people who do not understand.

This financial crisis is because too many people owe too much debt, and lack the wherewithal to dig themselves out of this hole.

Inflation serves to devalue the currency and so devalue the debt.

It’s not a bad thing when we are in a liquidity trap, it’s a good thing.

It’s more than a good thing, it’s essential to recovery.