Addressing the Pressing Problem of Soaring Inflation: Acknowledge Singaporeans’ Years of Sacrifice

Soaring inflation is now the most pressing concern.

It seems a very unfortunate coincidence of events that Singaporeans are now hit by soaring cost of living and housing prices, even before they can recover from the hardships of the Covid-19 pandemic. This however did not come out of the blue.

It was the result of years of monetary profligacy as the world central banks poured trillions of paper money into the financial system. Many may have thought that monetary profligacy ended after the Global Financial Crisis, but the reality was, yet another round of bigger monetary relaxation took place during the Covid-19 pandemic. Hence it is no surprise that as we emerge from the pandemic, inflation soared.

According to a reputable local fund manager, “The US Federal Reserve printed almost US$9 trillion from 2007 of which US$5 trillion was minted during the two years of the Covid-19 pandemic… (Similarly) the European Central Bank, the Bank of Japan and People’s Bank of China have printed US$8 trillion, US$6 trillion and US$4 trillion respectively (from 2007)”. Although these policies are well meaning, they have resulted in the suffering of ordinary citizens.

Singapore was no different. The MAS had increased money supply (measured by M1) from about $50 billion in 2007 to $300 billion in 2022. This money growth has allowed MAS to accumulate more foreign reserves, including the $180 billion of foreign reserves accumulated in 2020 and 2021, but Singaporeans had to bear the brunt of higher inflation.

If the government feels justified in exercising such macroeconomic policies, it should at least have policies to requite for Singaporeans’ sacrifices. Singaporeans struggling under the burden of soaring cost of living and property prices cannot be a good outcome, and the government should respond with a substantial compensation in the near future.

The $1.5 billion support package announced by Lawrence Wong on 22 June is a positive step in the right direction but it falls far short in terms of its size and conviction. We would recommend a $15 billion support package over the next three years so that Singaporeans are assured of a sizeable and predictable support.

$15 billion is small amount compared to the $180 billion additional reserves the government had accumulated in the last two to three years. The government can also expect a significant tax revenue increase as a $15 billion stimulus will in turn result in stronger economic growth.

We look forward to debate on this subject in Parliament.

Singaporeans deserve better.

For Country For people.

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