In 1958, economist William Phillips claimed there was a historical inverse relationship between the rate of unemployment and the corresponding rate of inflation. His conclusion was that full employment (whatever that means) was inflationary. He illustrated his claim through a chart referred to as the Phillips Curve.

The 1970’s stagflation outbreak in the U.S, which featured high unemployment coupled with inflation, dispelled Phillip’s broad correlation between those two conditions. This led many Keynesian economists to embrace a new, yet even more fatuous model called NAIRU, or the non-accelerating inflation rate of unemployment. This theory argued that the relationship between unemployment and inflation only presents itself when unemployment falls below its natural rate.

However, NAIRU provided little guidance as to what level of employment propels an economy into the hypothetical inflation vortex. Despite the fact this specious model has never been borne out in actual historical data, it remains peculiarly ingrained in the psyche of all modern-day central bankers.

But the truth is that inflation has nothing to do with how many people are employed. Inflation is solely the market’s reaction to a lack of confidence in the purchasing power of a nation’s currency.

NAIRU and the Phillips Curve are merely Keynesian red herrings used to convince the citizenry that central banks are not the primary culprits behind the growing trenchant wealth gap and the constant erosion in living standards of the middle class. To prove the point that inflation isn’t the product of too many people working we can view the current inflation battle in Brazil.

Since 2014, Brazil’s inflation has jumped from about 6%, to over 10%. If the Phillips Curve were correct, we would expect that unemployment in Brazil had plummeted during this same time-period; and that the inflation Brazils is experiencing is a byproduct of all the new paychecks entering the economy. However, this is not the case; since 2014 the unemployment rate has nearly doubled, going from a little over 4%, to almost 8%