Half the people alive today have never experienced serious inflation. They will shortly. At the end of it, many will have starved to death. Those remaining will live in a very different world from that of the past fifty years. Cheap food, easy personal mobility, considerable leisure time, increasingly high medical standards. All these are going to be severely dented by ‘the enemy within’ – inflation.

Can we prevent it? Can we cure it when it happens? How can we cope with it?

Societies wake up to threats quite suddenly, having long ignored the warning signs. Those who predicted problems were castigated as pessimists, ignored, mentally pilloried. “Optimism will solve our problems. Let’s be positive.” Yes, indeed, but let’s be realistic first.

The planet is not short of food or energy. It can support more people if we conserve a responsible amount of the natural habitat and don’t pollute ourselves to death. But many populations are more short of money today than they were ten years ago. Can that be right – by any standard?

Inflation used to be localized; it is now international. The big demands of rapid growth, fuelled by expectations of people who know how the other half lives and want a slice of it for themselves, mean the market mechanisms draw speculators into hoarding against the expected price rises. As I write this article available oil freighter tonnage is in short supply because so many tankers are being sailed deliberately slowly across the oceans anticipating better pickings when they arrive.

Are the speculators to blame for inflation? No they are not. They are fulfilling a function the market demands, although we should examine whether the controls on them are adequate to prevent informal cartels from artificially raising the costs. After all, hedge finds and derivatives were doing a job for the market, too. Their sordid demise led to much suffering and quite a lot of the world inflation now beginning.

Finding guilty parties is not going to solve the problem. Indeed, most of us are partly guilty. Our natural greed, whether motivated by the desire to secure others’ futures or simply to demonstrate our ability to win, is at the root of the problem. A competitive society demands competition and that means winners and losers.

As long as the law of supply and demand operates – forever – there will be inflation when something vital to human existence is scarce. Energy, food, water, air, medicine are all going to be in short supply in the future. When two or three shortages occur together horrendous inflation follows. We can only use our resources as prudently as possible to mitigate it.

If we work hard at transparency in business dealings we will solve some of the problems. Being open will discourage speculative hoarding, especially if there are rules against it, and corrupt marketing can be reduced. The world is aware of the need for transparency but is not yet committed to achieving it.

We must now do two things to cope with inflation.

Price increases must be lower than cost increases. That will reduce dividends but will make the value of those dividends greater in the medium term. One of the worst accelerators of inflation is the desire to profit in an inflationary market – and the ease of doing so.

We must also borrow more sensibly. Borrowing to invest is wise. Borrowing to indulge is foolish. When we learn that tomorrow really does come we will prepare for it properly.

Until then we shall have what we are about to see and experience – serious inflation.